As filed with the Securities and Exchange Commission on April 27, 1995
Registration No. 33-54939
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
First Commerce Corporation
(Exact name of registrant as specified in its charter)
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<C> <C> <C>
Louisiana 6711 72-0701203
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of incorporation Classification Code Number) Identification Number)
or organization)
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210 Baronne Street
New Orleans, Louisiana 70112
(504) 561-1371
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
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Copy to: THOMAS L. CALLICUTT, JR. Copy to:
ANTHONY J. CORRERO, III 210 Baronne Street JEFFREY C. GERRISH
Correro, Fishman & Casteix, L.L.P. New Orleans, Louisiana 70112 Gerrish & McCreary, P.C.
201 St. Charles Avenue, 47th Floor (504) 561-1371 700 Colonial Road, Suite 200
New Orleans, Louisiana 70170 (Name, address, including zip Memphis, Tennessee 38124
code, and telephone number,
including area code, of
agent for service)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
Upon the effective date of the mergers described in this registration
statement.
If the securities being registered on this Form are being offered
in connection with the formation of a holding company and there is
compliance with General Instruction G, please check the following box. [ ]
<PAGE>
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FIRST COMMERCE CORPORATION
CROSS REFERENCE SHEET
Item of Form S-4 Location in Prospectus
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A. Information About the Transaction
1. Forepart of Registration Cover Page
Statement and Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Back Inside Cover; Table of Contents
Cover Pages of Prospectus
3. Risk Factors, Ratio of *
Earnings to Fixed Charges and
Other Information
4. Terms of the Transaction Summary; The Plan
5. Pro Forma Financial Infor- First Commerce Corporation Pro Forma
mation Condensed Combined Financial
Statements (Unaudited)
6. Material Contacts with the *
Company Being Acquired
7. Additional Information *
Required for Reoffering by
Persons and Parties Deemed to
be Underwriters
8. Interests of Named Experts and *
Counsel
9. Disclosure of Commission *
Position on Indemnification
for Securities Act Liability
B. Information About the Registrant
10. Information with Respect to S- Information about FCC
3 Registrants
11. Incorporation of Certain Information about FCC
Information by Reference
12. Information with Respect to S- *
2 or S-3 Registrants
13. Incorporation of Certain *
Information by Reference
14. Information with Respect to *
Registrants other than S-2 or
S-3 Registrants
C. Information About the Company Being Acquired
15. Information with Respect to S- *
3 Companies
16. Information with Respect to S- Information about Bancshares
2 or S-3 Companies
17. Information with Respect to *
Companies other than S-2 or S-
3 Companies
D. Voting and Management Information
18. Information if Proxies,
Consents or Authorizations are
to be Solicited
(1) Date, Time and Place Introductory Statement-General
Information
(2) Revocability of Proxy Introductory Statement-Solicitation,
Voting and Revocation of Proxies
(3) Dissenters' Rights of Dissenters' Rights
Appraisal
(4) Persons Making Solici- Introductory Statement-General
tation
(5) Interests of Certain Summary-Interests of Certain Persons
Persons in Matters to be in the Merger; The Plan-Interests of
Acted upon; Voting Certain Persons in the Mergers; The
Securities and Principal Plan-Employee Benefits; Information
Holders Thereof About Bancshares
(6) Vote Required for Introductory Statement-Shares
Approval Entitled to Vote; Quorum; Vote
Required
(7) Directors and Executive Information About Bancshares;
Officers; Executive Information About FCC
Compensation; Certain
Relationships and Re-
lated Transactions
19. Information if Proxies, *
Consents or Authorizations are
not to be Solicited or in an
Exchange Offer
_______________
* Not applicable or answer is in the negative.
LAKESIDE BANCSHARES, INC.
One Lakeside Plaza
Box 1268
Lake Charles, Louisiana 70602
May , 1995
Dear Shareholder:
You are invited to attend a special meeting of
shareholders of Lakeside Bancshares, Inc. ("Bancshares") to be
held on Tuesday, June 27, 1995 at 3:30 p.m., local time in the
lobby of the main office of Lakeside National Bank of Lake
Charles, One Lakeside Plaza, Lake Charles, Louisiana.
At the meeting, you will be asked to approve an Agreement
and Plan of Merger and two related merger agreements (collec-
tively, the "Plan") pursuant to which, among other things,
Bancshares will merge into First Commerce Corporation ("FCC")
(the "Holding Company Merger"), and Lakeside National Bank of
Lake Charles ("LNB"), the wholly owned banking subsidiary of
Bancshares, will merge into The First National Bank of Lake
Charles ("FNBLC"), a wholly owned banking subsidiary of FCC
(the "Bank Merger" which, together with the Holding Company
Merger, are collectively called the "Mergers"). The terms of
the Plan provide that, on the effective date of the Holding
Company Merger, each outstanding share of common stock of
Bancshares will be converted into shares of FCC common stock as
more fully described in the attached Proxy Statement. You are
urged to read carefully the Proxy Statement in its entirety for
a more complete description of the terms of the Plan and the
proposed Mergers.
As you may recall, Bancshares previously executed an
agreement and plan of merger, along with related merger
agreements (collectively, the "Prior Plan"), dated as of July
21, 1994, providing for the Mergers. Bancshares held a special
meeting of shareholders on September 19, 1994, at which the
Prior Plan was approved by the holders of 93% of the
outstanding Bancshares common stock.
After the Bancshares shareholders' meeting, it became
clear that in order to eliminate its concerns regarding the
competitive impact of the Mergers, the staff of the Department
of Justice would require the divestiture of assets and
liabilities of LNB beyond that to which FCC had agreed in the
Prior Plan. Due to this position and other uncertainties
related to whether other conditions of the Prior Plan could be
met, FCC and Bancshares renegotiated the Prior Plan so as to
resolve those uncertainties. The result of these negotiations
was that Bancshares and FCC agreed to reduce the total dollar
amount of FCC Common Stock to be delivered to the Bancshares
shareholders in the Mergers. In return, FCC agreed to accept
most future risk related to these uncertainties, including the
uncertainty of divestiture. The parties executed the Plan on
February 27, 1995. Because the Plan alters the amount of FCC
common stock that will be delivered to the Bancshares
shareholders pursuant to the Mergers, the Plan must be approved
by the shareholders of Bancshares.
In general, pursuant to the Prior Plan, upon consummation
of the Mergers, Bancshares' shareholders would have been
entitled to receive in the aggregate a number of shares of FCC
common stock equal to approximately $37.0 million, based on the
average sales price of a share of FCC common stock as
determined immediately prior to the consummation of the
Mergers; provided that, if the average sales price as so
determined was less than $24, the number used to calculate the
exchange ratio would have a floor of 24, and if the average
sales price as so determined was greater than $33, the number
used to calculate the exchange ratio would have a cap of 33.
Under the terms of the Plan, the aggregate consideration to be
delivered to the Bancshares shareholders upon consummation of
the Mergers will be $30.0 million of FCC common stock, valued
immediately prior to consummation of the Mergers, with no cap
or floor on such average sales price, all as more fully
described in this Proxy Statement and Prospectus.
The Plan has been approved by your Board of Directors.
The Board believes that the proposed Mergers are in the best
interests of Bancshares' shareholders. As a result of the
proposed Mergers, you, as a new shareholder of FCC, will own
common stock in a bank holding company whose stock is publicly
traded on the Nasdaq National Market. Through its wholly owned
bank subsidiary FNBLC, FCC will be better able to offer a broad
range of banking services to Calcasieu and surrounding Parishes
and to compete more effectively with bank holding companies and
other financial institutions in the changing economic and legal
environment facing all financial institutions. The Board also
believes that the Plan provides fair financial terms to
Bancshares' shareholders.
The Board of Directors recommends that you vote FOR the
Plan and urges you to execute the enclosed proxy and return it
promptly in the accompanying envelope.
Very truly yours,
Tom Flanagan,
President
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LAKESIDE BANCSHARES, INC.
One Lakeside Plaza
Box 1268
Lake Charles, Louisiana 70602
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 27, 1995
Lake Charles, Louisiana
May , 1995
A special meeting of shareholders of Lakeside Bancshares,
Inc. ("Bancshares") will be held on Tuesday, June 27, 1995 at
3:30 p.m. local time in the lobby of the main office of
Lakeside National Bank of Lake Charles, One Lakeside Plaza,
Lake Charles, Louisiana, to vote upon the following matters:
1. A proposal to approve an Agreement and Plan of
Merger and two related merger agreements (collectively,
the "Plan") pursuant to which, among other things: (a)
Bancshares will merge into First Commerce Corporation
("FCC") (the "Holding Company Merger"), (b) Lakeside
National Bank of Lake Charles, the wholly owned bank
subsidiary of Bancshares, will merge into The First
National Bank of Lake Charles, a wholly owned bank
subsidiary of FCC (the "Bank Merger") and (c) on the
effective date of the Holding Company Merger, each
outstanding share of common stock of Bancshares will be
converted into a number of shares of FCC common stock as
determined in accordance with the terms of the Plan.
2. Such other matters as may properly come before the
meeting or any adjournments thereof.
Only shareholders of record at the close of business on
May 5, 1995 are entitled to notice of and to vote at the
special meeting.
Dissenting shareholders who comply with the procedural
requirements of the Business Corporation Law of Louisiana will
be entitled to receive payment of the fair cash value of their
shares if the Holding Company Merger is effected upon approval
by less than eighty percent (80%) of the total voting power of
Bancshares.
Your vote is important regardless of the number of shares
you own. Whether or not you plan to attend the special
meeting, please mark, date and sign the enclosed proxy and
return it promptly in the enclosed stamped envelope. Your
proxy may be revoked by appropriate notice to Bancshares'
Secretary at any time prior to the voting thereof.
BY ORDER OF THE BOARD OF
DIRECTORS
Joseph W. Roberts, Jr.
Secretary
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FIRST COMMERCE CORPORATION
Common Stock, $5.00 par value
________________________________________
Lakeside Bancshares, Inc.
Special Meeting of Shareholders to be held June 27, 1995
First Commerce Corporation ("FCC") has filed a
Registration Statement pursuant to the Securities Act of 1933,
as amended (the "Securities Act"), covering up to 1,540,000
shares of common stock, $5 par value, of FCC ("FCC Common
Stock") which may be issued in connection with a proposed
merger of Lakeside Bancshares, Inc. ("Bancshares") into FCC as
determined on the basis of the operation of the pricing formula
described herein. This document constitutes a Proxy Statement
of Bancshares in connection with the transactions described
herein and a Prospectus of FCC with respect to the shares of
FCC Common Stock to be issued if the merger is consummated.
The actual number of shares of FCC Common Stock to be issued
will be determined in accordance with the terms of the
agreements described herein.
________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT
AND PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
________________________________________
No person has been authorized to give any information or
to make any representations other than those contained in this
Proxy Statement and Prospectus, and, if given or made, such
information or representations must not be relied upon as
having been authorized by FCC or Bancshares. This Proxy
Statement and Prospectus shall not constitute an offer by FCC
to sell or the solicitation of an offer by FCC to buy nor shall
there be any sale of the securities offered by this Proxy
Statement and Prospectus in any state in which, or to any
person to whom, it would be unlawful prior to registration or
qualification under the laws of such state for FCC to make such
an offer or solicitation. Neither the delivery of this Proxy
Statement and Prospectus nor any sale made hereunder shall,
under any circumstances, create any implication that there has
been no change in the affairs of FCC or Bancshares since the
date hereof.
________________________________________
This Proxy Statement and Prospectus is dated May , 1995
<PAGE>
AVAILABLE INFORMATION
FCC and Bancshares are subject to the informational
requirements of the Securities Exchange Act of 1934 and in
accordance therewith are required to file reports and other
information with the Securities and Exchange Commission (the
"Commission"). Such reports, together with proxy statements
and other information filed by FCC and Bancshares, can be
inspected at, and copies thereof may be obtained at prescribed
rates from the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and from the Commission's Regional Offices at 7
World Trade Center, 13th Floor, New York, New York 10048 and
Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661.
FCC has filed with the Commission a Registration
Statement on Form S-4 ("Registration Statement") under the
Securities Act with respect to the common stock offered by this
Proxy Statement and Prospectus. This Proxy Statement and
Prospectus does not contain all of the information set forth in
the Registration Statement or the exhibits thereto. Statements
contained in this Proxy Statement and Prospectus as to the
contents of any documents are necessarily summaries of the
documents, and each statement is qualified in its entirety by
reference to the copy of the applicable document filed with the
Commission. For further information with respect to FCC,
reference is made to the Registration Statement, including the
exhibits thereto.
As more fully set forth under the headings captioned
"Information about Bancshares" and "Information about FCC"
elsewhere herein, certain information with respect to
Bancshares and FCC has been incorporated by reference into this
Proxy Statement and Prospectus. Bancshares and FCC hereby
undertake to provide without charge to each person to whom a
copy of this Proxy Statement and Prospectus has been delivered,
upon the written or oral request of such person, a copy of any
or all of the information or documents which have been
incorporated by reference herein, other than exhibits to such
documents. Requests for such copies should be directed, in the
case of Bancshares, to Mr. Gerald W. Cox, Treasurer, Lakeside
Bancshares, Inc., One Lakeside Plaza, Box 1268, Lake Charles,
Louisiana 70602, telephone (318) 433-2265, and, in the case of
FCC, to Mr. Thomas L. Callicutt, Jr., Senior Vice President and
Controller, First Commerce Corporation, P. O. Box 60279, 925
Common Street, 7th Floor, New Orleans, Louisiana 70160,
telephone (504) 582-2900. In order to ensure timely delivery
of the documents, any request should be made by June 13, 1995.
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY ...................................................... i
The Companies .......................................... i
The Banks .............................................. i
The Special Meeting .................................... i
Purpose of the Special Meeting ......................... ii
Vote Required .......................................... ii
Reasons for the Plan, Recommendation of
Bancshares' Board of Directors ....................... ii
Opinion of Southard Financial .......................... iii
Conversion of Bancshares Common Stock .................. iii
Exchange of Certificates ............................... iv
Conditions to Consummation of the Mergers .............. iv
Waiver, Amendment and Termination ...................... v
Interests of Certain Persons in the Mergers ............ v
Joinder of Shareholders ................................ vi
Employee Benefits ...................................... vi
Certain Federal Income Tax Consequences ................ vii
Dissenters' Rights ..................................... vii
Selected Financial Data of Bancshares .................. vii
Selected Financial Data of FCC ......................... viii
Comparative Per Share Data (Unaudited) ................. ix
Market Prices and Dividends ............................ xi
Recent Operating Results of FCC ........................ xi
INTRODUCTORY STATEMENT ....................................... 1
General ................................................ 1
Purpose of the Special Meeting ......................... 1
Shares Entitled to Vote; Quorum; Vote Required ......... 1
Solicitation, Voting and Revocation of Proxies ......... 1
THE PLAN ..................................................... 2
General ................................................ 2
Background of and Reasons for the Plan ................. 2
Opinion of Southard Financial .......................... 4
Conversion of Bancshares Common Stock .................. 6
Effective Date ......................................... 7
Exchange of Certificates ............................... 7
Regulatory Approvals and Other Conditions
of the Mergers ....................................... 8
Conduct of Business Prior to the Effective Date ........ 9
Waiver, Amendment and Termination ...................... 10
Interests of Certain Persons in the Mergers ............ 10
Joinder of Shareholders ................................ 12
Employee Benefits ...................................... 12
Expenses ............................................... 13
Status Under Federal Securities Laws; Certain
Restrictions on Resales .............................. 13
Accounting Treatment ................................... 13
CERTAIN FEDERAL INCOME TAX CONSEQUENCES ...................... 14
DISSENTERS' RIGHTS ........................................... 15
INFORMATION ABOUT BANCSHARES ................................. 16
INFORMATION ABOUT FCC ........................................ 16
COMPARATIVE RIGHTS OF SHAREHOLDERS ........................... 17
Preferred Stock ........................................ 17
Shareholders' Meetings ................................. 18
Preemptive Rights ...................................... 18
Stock Dividends ........................................ 18
Voting of Stock of Subsidiary .......................... 18
Board Nominations ...................................... 18
Election of Directors .................................. 18
Limitation of Personal Liability of Directors
and Officers ......................................... 18
Fair Price Protection Statute .......................... 19
LEGAL MATTERS ................................................ 19
EXPERTS ...................................................... 19
OTHER MATTERS ................................................ 20
FIRST COMMERCE CORPORATION PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED) .................................................. F-1
Appendix A - Selected Portions of Agreement and
Plan of Merger ............................................... A-1
Appendix B - Fairness Opinion of Southard Financial .......... B-1
Appendix C - Excerpt from Section 131 of the
Louisiana Business Corporation Law ........................... C-1
<PAGE>
SUMMARY
The following summary is necessarily incomplete and is
qualified in its entirety by the more detailed information
appearing elsewhere herein, the appendices hereto and the
documents incorporated herein by reference. Shareholders
are urged to read carefully all such material.
The Companies
First Commerce Corporation, a Louisiana corporation
("FCC"), is a multi-bank holding company with five wholly
owned bank subsidiaries in New Orleans, Baton Rouge,
Alexandria, Lafayette and Lake Charles, Louisiana. FCC and
its subsidiaries are referred to collectively herein as
"FCC's consolidated group." At December 31, 1994, FCC had
total consolidated assets of approximately $6.6 billion and
total consolidated deposits of approximately $5.5 billion.
FCC's principal executive offices are at 210 Baronne Street,
New Orleans, Louisiana 70112, and its telephone number is
(504) 561-1371. See "Information About FCC."
Lakeside Bancshares, Inc., a Louisiana corporation
("Bancshares"), is a one bank holding company that owns all
of the outstanding stock of Lakeside National Bank of Lake
Charles ("LNB"). At December 31, 1994, Bancshares had total
consolidated assets of approximately $177 million and total
consolidated deposits of approximately $160 million.
Bancshares' principal executive offices are at One Lakeside
Plaza, Lake Charles, Louisiana 70602, telephone (318) 433-
2265. Bancshares and LNB are referred to herein
collectively as "Bancshares' consolidated group." See
"Information About Bancshares."
FCC and Bancshares are collectively referred to herein
as the "Companies."
The Banks
The First National Bank of Lake Charles ("FNBLC"), a
national banking association that is a wholly owned
subsidiary of FCC, is a full service commercial bank
offering consumer and commercial banking services in
Calcasieu and Beauregard Parishes. At December 31, 1994,
FNBLC had total assets of approximately $357 million and
total deposits of approximately $311 million. In addition
to its main banking facility in Lake Charles, Louisiana,
FNBLC operates 12 full service branches in Lake Charles,
Sulphur, Westlake, DeQuincy, DeRidder and Moss Bluff,
Louisiana.
LNB, a national banking association that is a wholly-
owned subsidiary of Bancshares, is a full service commercial
bank offering consumer and commercial banking services in
Calcasieu Parish. At December 31, 1994, LNB had total
assets of approximately $177 million and total deposits of
approximately $160 million. In addition to its main banking
facility in Lake Charles, Louisiana, LNB operates six full
service branches in Lake Charles, Sulphur, and Moss Bluff
and an ATM in Westlake, Louisiana.
FNBLC and LNB are collectively referred to herein as
the "Banks."
The Special Meeting
A special meeting of the shareholders of Bancshares
will be held on June 27, 1995 at the time and place set
forth in the accompanying Notice of Special Meeting of
Shareholders (the "Special Meeting"). Only record holders
of the common stock, $2.50 par value per share, of
Bancshares ("Bancshares Common Stock") on May 5, 1995 are
entitled to notice of and to vote at the Special Meeting.
On that date, there were 500,000 shares of Bancshares Common
Stock outstanding each of which is entitled to one vote on
each matter properly to come before the Special Meeting.
Purpose of the Special Meeting
The purpose of the Special Meeting is to vote upon a
proposal to approve an Agreement and Plan of Merger and two
related merger agreements (collectively, the "Plan")
selected portions of which are attached hereto as Appendix
A, pursuant to which, among other things, Bancshares will
merge into FCC (the "Holding Company Merger"), and LNB will
merge into FNBLC (the "Bank Merger" which, together with the
Bank Merger, are collectively called the "Mergers"), with
the result that the business and properties of Bancshares
will become the business and properties of FCC, the business
and properties of LNB will become the business and
properties of FNBLC and shareholders of Bancshares will
receive the consideration described below under "Conversion
of Bancshares Common Stock." See "Introductory Statement -
Purpose of the Special Meeting."
Vote Required
The Plan must be approved by the affirmative vote of
two-thirds of the voting power present, in person or by
proxy, of Bancshares at the Special Meeting. Directors,
executive officers and certain principal shareholders of
Bancshares beneficially owning an aggregate of 276,062
shares, or approximately 55.2% of the outstanding Bancshares
Common Stock have executed agreements pursuant to which they
each agreed, subject to certain conditions, to vote in favor
of the Plan. Under Louisiana law, shareholders of FCC are
not required to approve the Plan. See "Introductory
Statement - Shares Entitled to Vote; Quorum; Vote Required."
Reasons for the Plan; Recommendation of Bancshares' Board of
Directors
Bancshares previously executed an agreement and plan of
merger, along with related merger agreements (collectively,
the "Prior Plan"), dated as of July 21, 1994, providing for
the Mergers. Bancshares held a special meeting of
shareholders on September 19, 1994, at which the Prior Plan
was approved by the holders of 93% of the outstanding
Bancshares Common Stock.
After the Bancshares shareholders' meeting, it became
clear that in order to eliminate its concerns regarding the
competitive impact of the Mergers, the staff of the
Department of Justice would require the divestiture of
assets and liabilities of LNB beyond that to which FCC had
agreed in the Prior Plan. Due to this position and other
uncertainties related to whether other conditions of the
Prior Plan could be met, FCC and Bancshares renegotiated the
Prior Plan so as to resolve those uncertainties. The result
of these negotiations was that Bancshares and FCC agreed to
reduce the total dollar amount of FCC Common Stock to be
delivered to the Bancshares shareholders in the Mergers. In
return, FCC agreed to accept most future risk related to
these uncertainties, including the uncertainty of
divestiture. The parties executed the Plan on February 27,
1995. Because the Plan alters the amount of FCC common
stock that will be delivered to the Bancshares shareholders
pursuant to the Mergers, the Plan must be approved by the
shareholders of Bancshares.
In general, pursuant to the Prior Plan, upon
consummation of the Mergers, Bancshares' shareholders would
have been entitled to receive in the aggregate a number of
shares of FCC common stock equal to approximately $37.0
million, based on the average sales price of a share of FCC
common stock as determined immediately prior to the
consummation of the Mergers; provided that, if the average
sales price as so determined was less than $24, the number
used to calculate the exchange ratio would have a floor of
24, and if the average sales price as so determined was
greater than $33, the number used to calculate the exchange
ratio would have a cap of 33. Under the terms of the Plan,
the aggregate consideration to be delivered to the
Bancshares shareholders upon consummation of the Mergers
will be $30.0 million of FCC common stock, valued
immediately prior to consummation of the Mergers, with no
cap or floor on such average sales price, all as more fully
described in this Proxy Statement and Prospectus. See "-
Conversion of Bancshares Common Stock."
Bancshares' Board of Directors believes the Plan is
fair to, and in the best interests of, Bancshares and its
shareholders and recommends that Bancshares' shareholders
vote FOR approval of the Plan. Bancshares' Board of
Directors also believes that the Plan will provide
significant value to all shareholders of Bancshares and
enable them to participate in opportunities for growth that
the Board believes the Plan makes possible. See "The Plan -
Background of and Reasons for the Plan."
Opinion of Southard Financial
Southard Financial ("Southard"), Memphis, Tennessee,
has delivered its written opinion to Bancshares' Board of
Directors to the effect that the terms of the Plan are fair
to the holders of Bancshares' Common Stock from a financial
point of view. A copy of the opinion of Southard dated
April 20, 1995, is attached as Appendix B. The opinion
should be read in its entirety for a description of the
procedures followed, assumptions and qualifications made,
matters considered and the limitations undertaken by
Southard. See "The Plan - Opinion of Southard Financial."
Conversion of Bancshares Common Stock
Under the terms of the Plan, on the date the Holding
Company Merger becomes effective (the "Effective Date"),
each outstanding share of Bancshares Common Stock will be
converted into a number of shares of common stock, $5.00 par
value per share, of FCC ("FCC Common Stock"), equal to the
quotient of (a) (i) $30 million less the Deductible Amount,
as defined below, divided by (ii) the Average Sales Price,
as defined below, of a share of FCC Common Stock, divided by
(b) the number of shares of Bancshares Common Stock
outstanding on the Effective Date.
The "Deductible Amount" is defined in the Plan as the
excess over $200,000 of the sum of (a) all expenses of
Bancshares and/or LNB incurred on or after December 6, 1994
through the Effective Time in connection with the Plan or
any of the transactions contemplated thereby or otherwise in
connection with the potential sale of Bancshares and LNB,
other than the investment banking fees and charges of Chaffe
& Associates, Inc. (the "Chaffe Fees"), plus (b) the greater
of $85,000 or the actual aggregate amount of the Chaffe Fees
incurred by Bancshares and/or LNB at any time in connection
with the Plan or any of the transactions contemplated
thereby or otherwise in connection with the potential sale
of Bancshares and/or LNB (other than any such fees which had
been paid prior to September 30, 1994). As of the date
hereof, it is Bancshares' estimate that there will be no
Deductible Amount.
The "Average Sales Price" is defined in the Plan as the
average of the closing sales prices of a share of FCC Common
Stock for the 20 trading days ending on the fifth trading
day prior to the closing date for the Mergers, for which
sales of FCC Common Stock were reported on the National
Association of Securities Dealers Automated Quotation System
for securities listed for trading by the Nasdaq National
Market.
The following table sets forth examples of the number
of shares of FCC Common Stock into which each share of
Bancshares Common Stock would be converted on the Effective
Date, assuming that on such date the Average Sales Price for
FCC Common Stock is as specified below, and assuming no
Deductible Amount.
Assumed Average Number of FCC
Sales Price of FCC Common Stock Shares Per Bancshares Share
$ 22 2.73
24 2.50
26 2.31
28 2.14
30 2.00
On April 21, 1995, the actual closing sales
price for a share of FCC Common Stock was
$28.50.
In lieu of the issuance of any fractional
share of FCC Common Stock to which a holder of
Bancshares Common Stock may be entitled, each
shareholder of Bancshares, upon surrender of the
certificate or certificates which immediately
prior to the Effective Date represented
Bancshares Common Stock held by such
shareholder, shall be entitled to receive a cash
payment (without interest) equal to such
fractional share multiplied by the Average Sales
Price. See "The Plan - Conversion of Bancshares
Common Stock."
Exchange of Certificates
Upon consummation of the Mergers, a letter
of transmittal, together with instructions for
the exchange of certificates representing shares
of Bancshares Common Stock for certificates
representing shares of FCC Common Stock will be
mailed to each person who was a shareholder of
record of Bancshares on the Effective Date of
the Mergers. Shareholders are requested not to
send in their Bancshares Common Stock
certificates until they have received a letter
of transmittal and further written instructions.
Bancshares shareholders who cannot locate
their certificates are urged promptly to contact
Andrew J. Betz, Lakeside Bancshares, Inc., One
Lakeside Plaza, Lake Charles, Louisiana 70602,
telephone number (318) 433-2265. A new
certificate will be issued to replace the lost
certificate(s) only upon execution by the
shareholder of an affidavit certifying that his
certificate(s) cannot be located and an
agreement to indemnify Bancshares and FCC
against any claim that may be made against it or
FCC by the owner of the certificate(s) alleged
to have been lost or destroyed. Bancshares or
FCC may also require the shareholder to post a
bond in such sum as is sufficient to support the
shareholder's agreement to indemnify Bancshares
and FCC. See "The Plan - Exchange of
Certificates."
Conditions to Consummation of the Mergers
In addition to approval by the shareholders
of Bancshares, consummation of the Mergers is
conditioned upon, among other things, (i) the
accuracy on the date of closing of the
representations and warranties, and the
compliance with covenants, made in the Plan by
each party, and the absence of any material
adverse change in the financial condition,
results of operations, business or prospects of
the other party's consolidated group, (ii)
receipt by FCC and FNBLC of required regulatory
approvals, (iii) that neither FCC's independent
public accountants nor the SEC shall have taken
the position that the Mergers may not be
accounted for as a pooling-of-interests, (iv)
the receipt by FCC and Bancshares of opinions as
to the qualification of the Mergers as tax-free
reorganizations under applicable law, (v) that
the transactions contemplated by the P&A
Agreement (defined below) and any other
Divestiture Agreement (defined below) shall have
been consummated or shall be consummated
simultaneously with the Closing, (vi) that by
the later of five days after the date of the
Special Meeting or any date specified by FCC
upon not less than five days advance notice to
Bancshares and LNB, Messrs. Roberts and Betz and
Ms. Beasley shall have either left the
employment of Bancshares and LNB in all
capacities other than as directors of Bancshares
or shall have executed non-competition
agreements with FCC and FNBLC, and (vii) certain
other conditions. The Companies intend to
consummate the Mergers as soon as practicable
after all of the conditions to the Mergers have
been met or waived.
The Plan provides that the following will
not be considered to be a material adverse
change in Bancshares' financial condition,
results of operations, business or prospects:
(i) any adverse change occurring as a result of
a loan that was approved by FCC in accordance
with the Plan or resulting from the transfer of
employees of Bancshares or LNB to positions at
FNBLC; or (ii) any of the following events
occurring after the date of the Plan, provided
that they do not result from a breach by
Bancshares or LNB of any of their respective
covenants in the Plan: (A) decreases in
Bancshares' deposits, (B) decreases in
Bancshares' net earnings, (C) deterioration in
the quality of Bancshares' portfolios of loans,
leases (as lessor), other real estate and/or
securities, (D) any departures of employees
(including officers) of Bancshares or LNB, and
(E) other adverse changes in the financial
condition, results of operations, business or
prospects of Bancshares' consolidated group that
do not exceed in the aggregate $200,000.
FCC filed an application seeking the prior
approval of the Holding Company Merger by the
Board of Governors of the Federal Reserve System
(the "Reserve Board") and an application for the
approval of the Bank Merger by the Office of the
Comptroller of the Currency (the "Comptroller")
on March 27, 1995. FCC expects to receive such
approvals in the third quarter of 1995; however,
there can be no assurance that the approvals
will be obtained, or that the other conditions
to consummation of the Mergers will be satisfied
by such date or at all. If the required
approvals are obtained, the Mergers are subject
to review by the U.S. Department of Justice,
which may seek to enjoin the Mergers or require
divestitures of assets if it believes the
Mergers would have certain anti-competitive
effects in the Lake Charles market.
Representatives of the Department of Justice
have expressed concerns about the effect of the
Mergers. In an effort to eliminate any concern
about the competitive impact of the Mergers,
FNBLC and LNB have entered into a Purchase and
Assumption Agreement (the "P&A Agreement"),
dated as of March 21, 1995, pursuant to which,
subject to certain conditions, immediately prior
to consummation of the Mergers, two of LNB's
branches will be acquired by Jeff Davis Bank &
Trust Company. FCC and FNBLC have also agreed
in the Plan that if other divestitures are
required, FCC and FNBLC will use their
reasonable best efforts to successfully
negotiate an appropriate divestiture agreement
(a "Divestiture Agreement") with a qualified
acquiror on acceptable terms. While FCC
believes that these efforts should
satisfactorily address the concerns of the
Department of Justice in a manner that would
permit the Mergers to proceed, there is no
assurance that they will do so. See "The Plan -
Regulatory Approvals and Other Conditions of the
Mergers."
Waiver, Amendment and Termination
The Plan provides that each of the parties
to the Plan may waive any of the conditions to
its obligation to consummate the Mergers other
than the receipt of all necessary regulatory
approvals, the approval of the shareholders of
Bancshares and the satisfaction of all
requirements prescribed by law for consummation
of the Mergers.
The Plan may be amended, at any time before
or after its approval by the shareholders of
Bancshares, by the mutual agreement of the
Boards of Directors of the parties to the Plan;
provided that, under Louisiana law any amendment
made subsequent to such shareholder approval may
not alter the amount or type of shares into
which Bancshares Common Stock will be converted,
alter any term of the Articles of Incorporation
of FCC, or alter any term or condition of the
Plan in a manner that would adversely affect any
shareholder of Bancshares.
The Plan may be terminated at any time
prior to the Effective Date of the Mergers by
(i) the mutual consent of the parties, (ii) the
Board of Directors of either FCC or Bancshares
in the event of a material breach or material
anticipatory breach by any member of the
consolidated group of the other of them of any
representation or warranty in the Plan which
cannot be cured by the earlier of 10 days after
written notice of such breach or the date
specified in subparagraph (iii)(A) hereof, (iii)
either FCC or Bancshares if (A) all the
conditions to closing required by the Plan have
not been met or waived, cannot be met, or the
Mergers have not occurred by June 30, 1995;
provided that, if at that date or at any time
within 15 days prior thereto there remain
unfulfilled any conditions to closing that
involve any regulatory or other governmental
agency, then such date shall be extended until
the earlier of the 15th day after all such
conditions are fulfilled or August 31, 1995, or
(B) any such condition, other than any involving
any regulatory or other governmental agency,
cannot be met by June 30, 1995 and has not been
waived by each party in whose favor such
condition runs, or (C) any condition involving
any regulatory or other governmental agency
cannot be met by August 31, 1995, (iv) FCC or
FNBLC if the number of shares of Bancshares
Common Stock as to which holders thereof have
perfected dissenters' rights together with the
number of such shares as to which the holders
are entitled to receive cash payments in lieu of
fractional shares, exceeds, in the aggregate,
9.9% of the total number of shares of Bancshares
Common Stock outstanding on the date of the
closing, (v) the Board of Directors of either
FCC or FNBLC if Bancshares' Board of Directors
(A) withdraws, modifies or changes its
recommendation to its shareholders as contained
herein or resolves to do so, (B) recommends to
its shareholders any other merger,
consolidation, share exchange, business
combination or other similar transaction, any
sale, lease, transfer or other disposition of
all or substantially all of the assets of any
member of Bancshares' consolidated group or any
acquisition of 15% or more of any class of
Bancshares' capital stock or (C) makes any
announcement of an intention or agreement to do
any of the foregoing, or (vi) the Board of
Directors of Bancshares if certain filings or
other communications or actions relating to the
obtaining of regulatory approvals for the
Mergers are not made or taken within the time
frames specified in the Plan. See "The Plan -
Waiver, Amendment and Termination."
Interests of Certain Persons in the Merger
FCC and FNBLC have agreed that, following
the Effective Date, they will indemnify each
person who served as an officer or director of
Bancshares or LNB on February 27, 1995 or has
served as a director at any time since January
1, 1990, against all damages, liabilities,
judgments and claims based upon or arising out
of such person's service in such capacity to the
same extent as he would have been indemnified
under the applicable Articles of Incorporation
or By-laws of Bancshares or LNB, as appropriate,
as they were in effect on July 21, 1994. With
certain exceptions, the aggregate amount of
indemnification payments required to be made by
FCC and FNBLC to such persons is $5 million.
See "The Plan - Interests of Certain Persons in
the Merger." Directors and officers who do not
execute a Joinder of Shareholders or an
alternative document as permitted by the Plan
will not be entitled to such contractual
indemnification.
LNB President and Chief Executive Officer
Tom Flanagan, Executive Vice President Joseph W.
Roberts, Jr., Senior Vice President and Trust
Officer Andrew J. Betz, and Senior Vice
President Deanna K. Beasley are parties to
separate employment contracts with LNB. The
contracts with Messrs. Roberts and Betz and Ms.
Beasley were amended on October 31, 1994 and
expire on December 31, 1995, and the contract
with Mr. Flanagan commenced October 31, 1994 and
expires on the earlier of December 31, 1995 or
the closing of the Mergers. The contracts call
for the employment of each of the specified
persons for the specified terms; however, LNB
may in its discretion at any time during the
term of the contract terminate the employment of
the affected employee and, in the case of Mr.
Flanagan, deliver to him title to his company
car, and in the case of the other officers, pay
that employee in a lump sum a separation
payment; provided however that no payment shall
be made if the employee is indicted for a
criminal offense in connection with his or her
conduct at LNB.
It is the present intent of FNBLC to cause
Mr. Flanagan to become an advisory director of
FNBLC following consummation of the Mergers.
See "The Plan - Interests of Certain Persons in
the Merger."
Joinder of Shareholders
As a condition to consummation of the
Mergers, each Bancshares' director (other than
Malcolm Martin) and certain principal
shareholders (except as noted below), including
without limitation each shareholder beneficially
owning 5% or more of Bancshares Common Stock and
Mary Ellen Chavanne, Hazel Prince Chavanne,
Claire C. Turner, Harry J. Chavanne, Jeannie C.
McGann and David P. Chavanne, has executed an
individual agreement pursuant to which he or she
has agreed (i) to vote as a shareholder in favor
of the Plan and against any other proposal
relating to the sale or disposition of LNB or
Bancshares, (ii) not to transfer any shares of
Bancshares Common Stock, except under certain
conditions, (iii) not to trade in FCC Common
Stock prior to the Effective Date, (iv) to
release FCC and FNBLC from any indemnification
obligation that either of them may have to
indemnify him in his capacity as an officer,
director or employee of any member of
Bancshares' consolidated group except as set
forth in the Plan and (v) that for a period of
one year following the Effective Date he or she
will not assume a significant proprietary or
managerial position with a financial institution
that competes with the business of LNB as
continued by FNBLC. Messrs. Roberts and Betz
and Ms. Beasley have executed a joinder
agreement that does not contain an agreement not
to compete, and Mr. Flanagan has executed a
Commitment and Non-Competition Agreement in lieu
of a joinder agreement that contains an
agreement not to compete for six months
following the Effective Date. See "The Plan -
Joinder of Shareholders."
Employee Benefits
Pursuant to the Plan, FCC has agreed that,
from and after the Effective Date, FCC or FNBLC
will offer to all persons who were employees of
Bancshares or LNB immediately prior to the
Effective Date and who become employees of FNBLC
following the Mergers, the same employee
benefits as are offered by FCC or FNBLC to
employees of FNBLC, except that there will not
be a waiting period for coverage under the First
Commerce Corporation Flexible Benefit Plan or
any of its constituent plans, including the
First Commerce Corporation Medical and Dental
Care Plan, and no employee of LNB who is an
active employee on the Effective Date will be
denied such benefits for a pre-existing
condition. Full credit will be given for prior
service by such employees with Bancshares or LNB
for eligibility and vesting purposes under all
of FCC's benefit plans and policies, except that
credit for prior service will not be given for
eligibility, vesting or benefit accrual purposes
under FCC's retirement plan. FCC has also
agreed to pay certain additional benefits
accrued under plans of Bancshares and LNB. See
"The Plan - Employee Benefits."
Certain Federal Income Tax Consequences
Consummation of the Mergers is conditioned
upon receipt by the Companies of an opinion from
Arthur Andersen & Co. to the effect that, among
other things, each of the Mergers will qualify
as a tax-free reorganization under applicable
law, and that each Bancshares shareholder who
receives FCC Common Stock pursuant to the
Holding Company Merger will not recognize gain
or loss except with respect to the receipt of
cash (i) in lieu of fractional shares of FCC
Common Stock, or (ii) pursuant to the exercise
of dissenters' rights. Because of the
complexity of the tax laws, each shareholder
should consult his tax advisor concerning the
applicable federal, state and local income tax
consequences of the Mergers. See "Certain
Federal Income Tax Consequences."
Dissenters' Rights
Under certain conditions, and by complying
with the specific procedures required by statute
and described herein, shareholders of Bancshares
will have the right to dissent from the Holding
Company Merger, in which event, if the Holding
Company Merger is consummated, they may be en-
titled to receive in cash the fair value of
their shares of Bancshares Common Stock. See
"Dissenters' Rights."
Selected Financial Data of Bancshares
The following selected financial data of
Bancshares with respect to each of the fiscal
years in the five-year period ended December 31,
1994 have been derived from the consolidated
financial statements of Bancshares' consolidated
group and should be read in conjunction with
Bancshares' 1994 Annual Report on Form 10-K that
has been incorporated by reference in the Proxy
Statement and Prospectus.
(In thousands of dollars, except per share data)
Years Ended December 31,
</TABLE>
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Average Balance
Sheet Data:
Total assets $ 180,316 $ 188,172 $ 196,439 $ 196,547 $ 188,437
Earning assets 157,840 165,679 172,836 171,996 165,052
Loans and leases* 88,570 93,747 100,341 103,340 105,639
Securities 57,242 59,822 59,337 55,020 48,598
Deposits 161,983 170,899 179,991 181,327 172,905
Long-term debt - - - - -
Stockholders'
equity 16,699 15,575 14,892 13,336 12,833
Income Statement
Data:
Total interest
income $ 11,533 $ 11,999 $ 13,593 $ 16,779 $ 17,927
Net interest
income 8,809 8,792 8,795 8,793 8,614
Provision for
loan losses - - 675 300 3,743
Other income
(exclusive of
securities
transactions) 3,238 3,256 3,216 2,758 2,892
Operating expense 9,710 9,764 10,383 10,005 8,768
Net income 1,562 1,331 1,215 1,661 (821)
</TABLE>
<TABLE>
<CAPTION>
(In thousands of dollars, except per share data)
Years Ended December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Per Share Data:
Fully diluted
earnings
per share $ 3.12 $ 2.66 $ 2.43 $ 3.32 $ (1.72)
Primary earnings
per share 3.12 2.66 2.43 3.32 (1.72)
Cash dividends 1.10 1.10 .90 .60 -
Book value
(period - end) 33.60 31.97 31.73 29.63 26.62
High stock price 32.75 24.00 19.15 17.00 18.00
Low stock price 32.75 24.00 17.00 17.00 17.00
Key Ratios:
Net income as a
percent of
average assets .87% .71% .62% .85% (.43%)
Net income as a
percent of
average total
equity 9.35% 8.55% 8.16% 12.46% (6.40%)
Net interest
margin 5.58% 5.31% 5.09% 5.11% 5.27%
Allowance for loan
losses to loans
and leases* 3.32% 3.07% 3.08% 2.75% 3.58%
Leverage ratio 9.94% 8.85% 7.85% 7.09% 6.69%
Dividend payout
ratio 35.21% 41.32% 37.04% 18.06% -
</TABLE>
______________________
*Net of unearned income.
Selected Financial Data of FCC
The following selected financial data with
respect to each of the fiscal years in the five-
year period ended December 31, 1994, have been
derived from the consolidated financial
statements of FCC's consolidated group and
should be read in conjunction with FCC's 1994
Annual Report on Form 10-K, that has been
incorporated by reference in this Proxy
Statement and Prospectus.
Subsequent to December 31, 1994, FCC
consummated mergers with First Bancshares, Inc.
and City Bancorp, Inc. The historical data
presented does not include the effect of these
two mergers, however, pro forma combined
financial statements giving effect to all of
these transactions are included elsewhere in
this Proxy Statement and Prospectus.
<TABLE>
<CAPTION>
(In thousands of dollars, except per share data)
Years Ended December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Average Balance
Sheet Data:
Total assets $ 6,453,841 $ 6,335,669 $ 5,741,399 $ 4,671,478 $ 4,482,019
Earning assets 5,924,892 5,812,761 5,280,347 4,257,388 4,035,104
Loans and leases* 2,823,061 2,407,231 2,184,584 2,323,018 2,402,541
Securities 3,038,747 3,110,544 2,734,925 1,515,299 1,290,487
Deposits 5,220,425 5,176,873 4,953,572 3,931,612 3,552,578
Long-term debt 89,266 95,238 97,154 101,246 103,033
Stockholders'
equity 500,240 469,694 355,716 235,385 239,011
</TABLE>
<TABLE>
<CAPTION>
(In thousands of dollars, except per share data)
Years Ended December 31,
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Total interest
income $ 408,004 $ 393,334 $ 398,701 $ 393,922 $ 408,996
Net interest
income 256,261 250,010 235,353 191,862 168,021
Provision for
loan losses (11,568) (4,504) 22,040 43,734 47,425
Other income
(exclusive of
securities
transactions) 110,434 102,844 96,369 83,419 73,213
Securities transactions (43,549) (423) 258 259 55
Operating expense 241,362 221,080 203,781 185,963 165,325
Net income 63,684 95,214 72,475 34,029 22,038
Per Share Data:
Fully diluted
earnings
per share $ 2.19 $ 3.18 $ 2.70 $ 1.56 $ .94
Primary earnings
per share 2.25 3.48 2.88 1.56 .94
Cash dividends 1.10 .85 .70 .64 .64
Book value
(period - end) 15.71 17.28 14.57 11.38 10.45
High stock price 30.00 32.20 27.86 18.14 12.54
Low stock price 21.75 23.90 16.94 7.20 6.66
Key Ratios:
Net income as a
percent of
average assets .99% 1.50% 1.26% .73% .49%
Net income as a
percent of
average total
equity 12.73% 20.27% 20.37% 14.46% 9.22%
Net income as a
percent of
average common
equity 13.48% 22.18% 22.85% 14.46% 9.11%
Net interest
margin 4.42% 4.40% 4.58% 4.69% 4.37%
Allowance for loan
losses to loans
and leases* 1.66% 2.55% 3.44% 3.11% 2.44%
Leverage ratio 8.04% 7.63% 6.76% 4.87% 4.66%
Dividend payout
ratio 48.89% 24.27% 25.78% 41.03% 68.09%
</TABLE>
______________________
*Net of unearned income.
Comparative Per Share Data (Unaudited)
The following table presents certain net
income, cash dividend and book value per common
share information for FCC and Bancshares on an
historical, unaudited pro forma combined and
unaudited pro forma equivalent basis. The
unaudited pro forma combined information is
based upon the historical financial condition
and results of operations of the Companies and
adjustments directly attributable to the
proposed Holding Company Merger based on
estimates derived from information currently
available. They do not purport to be indicative
of the results that would actually have been
obtained if the Holding Company Merger had been
in effect on the date or for the periods
indicated below, or the results that may be
obtained in the future.
Subsequent to December 31, 1994, FCC
completed mergers with First Bancshares, Inc.
and City Bancorp, Inc. The pro forma combined
data presented does not give effect to these two
mergers, however, pro forma combined financial
statements giving effect to all of these
transactions are included elsewhere in this
Proxy Statement and Prospectus.
<TABLE>
<CAPTION>
Historical
_________________ Pro Forma Bancshares
FCC Bancshares Combined <FN1><FN2> Equivalent
___ __________ __________________ __________
<S> <C> <C> <C> <C>
Primary earnings per
common share <FN3>:
Years ended:
December 31, 1994 $ 2.25 $ 3.12 $ 2.21 $ 5.22
December 31, 1993 3.48 2.92 3.38 7.98
December 31, 1992 2.88 2.43 2.80 6.61
Dividends declared per
common share <FN4>:
Years ended:
December 31, 1994 $ 1.10 $ 1.10 $ 1.07 $ 2.60
December 31, 1993 .85 1.10 .83 2.01
December 31, 1992 .70 .90 .68 1.65
</TABLE>
<TABLE>
<CAPTION>
Historical
_________________ Pro Forma Bancshares
FCC Bancshares Combined <FN1><FN2> Equivalent
___ __________ __________________ __________
<S> <C> <C> <C> <C>
Book value per
common share <FN5>:
As of December 31, 1994 $15.71 $ 33.60 $ 15.65 $ 36.93
</TABLE>
____________
<FN1> In accordance with generally accepted
accounting principles, FCC expects to
account for the Mergers using the pooling-
of-interests method.
<FN2> To calculate pro forma combined per share
information, it has been assumed that the
number of outstanding shares of FCC Common
Stock includes shares to be issued by FCC
upon consummation of the Holding Company
Merger. Under the terms of the Plan, the
number of shares of FCC Common Stock to be
delivered will be determined by reference
to the average of the closing sales prices
of a share of FCC common stock for the 20
trading days ending on the fifth trading
day before the closing date of the Holding
Company Merger. For purposes of this
table, the assumed conversion rate is 2.36
(the "Assumed Conversion Rate") based on
the closing sales prices of a share of FCC
common stock for the 20 trading days ended
April 18, 1995.
<FN3> Pro forma primary earnings per common share
was calculated by dividing the combined net
income, adjusted for preferred stock
dividends, of FCC and Bancshares during the
periods presented by the weighted average
outstanding shares of FCC Common Stock
during such periods, after adjustment for
shares of FCC Common Stock to be issued in
connection with the Holding Company Merger.
Bancshares adopted Statement of Financial
Accounting Standards No. 109, "Accounting
for Income Taxes" in 1993 and reported the
cumulative effect of this accounting change
in their 1993 consolidated statement of
income. The effect of this change was a
$131,000 decrease in net income for
Bancshares. This amount is not considered
to be a component of ongoing results and
accordingly has not been included in the
historical or pro forma combined amounts
presented. The Bancshares equivalent data
presented is the product of the pro forma
combined per share information multiplied
by the Assumed Conversion Rate.
<FN4> Pro forma dividends were calculated by
multiplying FCC's and Bancshares' dividend
rates by the applicable weighted average
outstanding shares of FCC and Bancshares
Common Stock. Pro forma dividends per
common share were then calculated by
dividing pro forma total dividends by the
weighted average outstanding shares of FCC
Common Stock during such periods, after
adjustment for shares of FCC Common Stock
to be issued in connection with the Holding
Company Merger. The Bancshares equivalent
data presented was calculated by
multiplying the historical per share FCC
Common Stock dividend by the Assumed
Conversion Rate.
<FN5> Pro forma combined book value per common
share was calculated by dividing the total
of FCC's and Bancshares' common
stockholders' equity by the total shares of
FCC Common Stock outstanding as of December
31, 1994, after adjustment for unearned
shares of FCC restricted stock and for
shares of FCC Common Stock to be issued in
connection with the Holding Company Merger.
The Bancshares equivalent data presented is
the product of the pro forma combined per
share information multiplied by the Assumed
Conversion Rate.
Market Prices and Dividends
Market Prices. On February 24, 1995, the
last trading day preceding the date that the
Companies entered into the Plan, the closing
sales price for a share of FCC Common Stock, as
quoted on Nasdaq National Market, was $26.50.
No assurance can be given as to the market price
of FCC Common Stock on the Effective Date. On
April 21, 1994, the closing sales price for a
share of FCC Common Stock was $28.50 and, if
such date had been the Effective Date of the
Mergers the Average Sales Price would have been
$25.78, assuming no Deductible Amount.
Bancshares Common Stock is not traded on
any exchange, and there is no established public
trading market for the stock. There are no bid
or asked prices available for Bancshares Common
Stock. There is, however, limited and sporadic
trading of Bancshares Common Stock in its local
area, principally through local brokers. Based
on the limited information available to
management, sales were effected during the past
twelve months at approximately $32.75 per share,
but there can be no assurance that such trades
were effected on an arm's-length basis. See
"Information About Bancshares."
Recent Operating Results of FCC
FCC reported its first quarter 1995 results
on April 13, 1995. During the first quarter of
1995, FCC completed the acquisitions of First
Bancshares, Inc. (First) and City Bancorp, Inc..
In the following discussion, historical
financial information for prior quarters has
been restated to reflect the First pooling-of-
interests.
Net income was $10.6 million in 1995's
first quarter, compared to $7.3 million in the
fourth quarter of 1994 and $27.4 million in
1994's first quarter. Included in the current
quarter's results were $13.3 million of losses
on securities transactions, a positive provision
for loan losses of $3.0 million, $2.3 million in
merger-related charges and $1.1 million in
severance expense.
Net interest income (FTE) was $71.6 million
in the first quarter, compared to $71.9 million
in the fourth quarter and $67.9 million in the
first quarter of 1994. Fewer days and a lower
level of earning assets caused the decline of
less than 1% from the fourth quarter. The
increase from 1994's first quarter reflected 24%
average loan growth and the higher-yielding
securities portfolio.
The net interest margin was 4.68% for the
quarter. This was an improvement of 10 basis
points over the fourth quarter and was 29 basis
points higher than 1994's first quarter. While
deposit costs were higher than in the first and
fourth quarters of 1994, loan growth and
improved securities yields offset the increase.
The provision for loan losses was a
positive $3.0 million for the first quarter of
1995. In 1994, there were negative provisions
of $.4 million in the fourth quarter and $3.8
million in the first quarter. The return to a
positive provision is the result of continued
strong loan growth.
Other income, excluding securities
transactions, was $29.5 million for the first
quarter, compared to $29.4 million and $28.2
million in the fourth and first quarters of
1994, respectively. The less than 1% increase
from the fourth quarter was due to higher trust
and ATM fees, partially offset by a seasonal
decline in credit card fees. Increases in
credit card, ATM, trust and deposit fees caused
the increase from the first quarter of 1994.
These increases were partially offset by a $1.1
million gain on the sale of mortgage loans
included in 1994's first quarter.
During the first quarter of 1995, $528
million of securities were sold at a loss of
$13.3 million. Securities transactions resulted
in losses of $18.3 million in the fourth quarter
and gains of $1.1 million in 1994's first
quarter. At the end of 1995's first quarter,
the securities portfolio yield was 6.70%,
compared to 6.26% at the end of 1994 and 5.05%
at March 31, 1994. The SFAS 115 adjustment, net
of tax, was a loss of $17.4 million at March 31,
1995, compared to a loss of $72.3 at year-end
1994 and a $22.2 million loss at March 31, 1994.
Operating expense was $67.7 million in the
first quarter and included $2.3 million for
merger-related charges and $1.1 million in
severance expense. In 1994's fourth quarter,
operating expense was $70.9 million and included
$2.7 million of merger-related charges and $2.3
million in severance expense. Operating expense
was $58.9 million in last year's first quarter.
The severance expense recognized in both the
current and fourth quarter related to delivery
system redesign and other strategic initiatives.
Excluding severance and merger-related charges,
operating expense declined from the fourth
quarter mainly because of lower professional
fees. Additional increases from 1994's first
quarter resulted from merit raises for
employees, higher incentive pay and depreciation
of branch automation equipment.
<PAGE>
INTRODUCTORY STATEMENT
General
This Proxy Statement and Prospectus is
furnished to the shareholders of Lakeside
Bancshares, Inc. ("Bancshares") in connection
with the solicitation of proxies on behalf of
its Board of Directors for use at a special
meeting of shareholders of Bancshares (the
"Special Meeting") to be held on the date and at
the time and place specified in the accompanying
Notice of Special Meeting of Shareholders, or
any adjournments thereof.
Bancshares and First Commerce Corporation
(collectively, the "Companies") have each
supplied all information included herein with
respect to it and its consolidated subsidiaries.
Bancshares and its subsidiary are collectively
referred to herein as "Bancshares' consolidated
group" and First Commerce Corporation ("FCC")
and its subsidiaries are collectively referred
to herein as "FCC's consolidated group."
This Proxy Statement and Prospectus was
mailed to shareholders of Bancshares on
approximately May _____, 1995.
Purpose of the Special Meeting
The purpose of the Special Meeting is to
consider and vote upon a proposal to approve an
Agreement and Plan of Merger dated as of
February 27, 1995 between FCC and its wholly
owned subsidiary, The First National Bank of
Lake Charles ("FNBLC"), on the one hand, and
Bancshares, and its wholly owned subsidiary,
Lakeside National Bank of Lake Charles ("LNB"),
on the other, and a related Agreement of Merger
between FNBLC and LNB (the "Bank Merger
Agreement") and Joint Agreement of Merger
between FCC and Bancshares (the "Company Merger
Agreement" and, together with the Bank Merger
Agreement, the "Plan"). Pursuant to the Plan,
Bancshares will merge into FCC (the "Holding
Company Merger") and LNB will merge into FNBLC
(the "Bank Merger" which, together with the
Holding Company Merger, are collectively called
the "Mergers") and each outstanding share of
common stock, $2.50 par value per share, of
Bancshares ("Bancshares Common Stock") will be
converted into a number of shares of common
stock, $5.00 par value per share, of FCC ("FCC
Common Stock") as described under the heading
captioned "The Plan - Conversion of Bancshares
Common Stock."
Shares Entitled to Vote; Quorum; Vote Required
Only holders of record of Bancshares Common
Stock at the close of business on May 5, 1995
are entitled to notice of and to vote at the
Special Meeting. On that date, there were
500,000 shares of Bancshares Common Stock
outstanding, each of which is each entitled to
one vote on each matter to come properly before
the Special Meeting.
With respect to consideration of the Plan
and any other matter properly brought before the
Special Meeting, the presence at the Special
Meeting, in person or by proxy, of the holders
of a majority of the outstanding shares of
Bancshares Common Stock is necessary to
constitute a quorum.
The Plan must be approved by the
affirmative vote of two-thirds of the voting
power present, in person or by proxy, of
Bancshares at the Special Meeting. An
abstention will have the effect of a vote
against the Plan but will cause a shareholder
otherwise entitled to dissenters' rights to
forfeit any claim to such rights. Directors,
executive officers and certain principal
shareholders of Bancshares beneficially owning
an aggregate of 276,062 shares, or approximately
55.2% of the outstanding Bancshares Common Stock
have executed agreements pursuant to which they
each agreed, subject to certain conditions, to
vote in favor of the Plan.
Louisiana law does not require that
shareholders of FCC approve the Plan.
Solicitation, Voting and Revocation of Proxies
In addition to soliciting proxies by mail,
directors, officers and employees of Bancshares,
without receiving additional compensation
therefor, may solicit proxies by telephone and
in person. Arrangements will also be made with
brokerage firms and other custodians, nominees
and fiduciaries to forward solicitation
materials to the beneficial owners of shares of
Bancshares Common Stock, and Bancshares will
reimburse such parties for reasonable out-of-
pocket expenses incurred in connection
therewith. The cost of soliciting proxies is
being paid for by Bancshares.
The proxies that accompany this Proxy
Statement and Prospectus permit each holder of
record of Bancshares Common Stock on the record
date to vote on all matters that properly come
before the Special Meeting. Where a shareholder
specifies his choice on the proxy with respect
to the proposal to approve the Plan, the shares
represented by the proxy will be voted in
accordance with such specification. If no such
specification is made, the shares will be voted
in favor of the Plan. If a shareholder does
not sign and return a proxy and specify on the
proxy an instruction to vote against the Plan,
he will not be able to exercise dissenters'
rights with respect to the Holding Company
Merger unless he attends the Special Meeting in
person and votes against the Plan and gives
written notice of his dissent from the Plan at
or prior to the Special Meeting. See
"Dissenters' Rights." A proxy may be revoked by
(i) giving written notice of revocation at any
time before its exercise to Joseph W. (Bill)
Roberts, Jr., Lakeside Bancshares, Inc., One
Lakeside Plaza, Lake Charles, Louisiana 70602,
(ii) executing and delivering to Mr. Roberts at
any time before its exercise a later dated proxy
or (iii) attending the Special Meeting and
voting in person.
THE PLAN
General
The transactions contemplated by the Plan
are to be effected in accordance with the terms
and conditions set forth in the Plan, which is
incorporated herein by reference. The following
brief description does not purport to be
complete and is qualified in its entirety by
reference to the Plan, a copy of selected
portions of which is attached hereto as Appendix
A.
The ultimate result of the transactions
contemplated by the Plan will be that the
business and properties of LNB will become the
business and properties of FNBLC, the business
and properties of Bancshares will become the
business and properties of FCC and the
shareholders of Bancshares will become
shareholders of FCC. The steps taken to achieve
this result involve the following transactions:
(i) Bancshares will merge into FCC and the
separate existence of Bancshares will cease;
(ii) LNB will merge into FNBLC and the separate
existence of LNB will cease and (iii)
shareholders of Bancshares will receive the
consideration described below under the heading
captioned "The Plan - Conversion of Bancshares
Common Stock."
Background of and Reasons for the Plan
Background. In August 1993, Bancshares and
the Chavanne family, who collectively own over
40% of Bancshares Common Stock, entered into a
settlement agreement in response to long-
standing litigation between the Chavannes and
Bancshares, LNB and their respective directors.
The settlement agreement called for a special
committee of the Board to be established to
administer a process of exploring the
marketability of Bancshares and/or the shares of
Bancshares held by the Chavanne family. The
Board appointed the Special Committee, which
included the following members: Ray Hines,
George A. McElveen, Jr., Malcolm D. Martin and
Wayne Vincent (all Board members) and Tom
McDade, a consultant who represented the
Chavannes.
On January 6, 1994, upon the recommendation
of the Special Committee, the Board of Directors
of Bancshares retained the New Orleans
investment banking firm of Chaffe and Associates
to conduct an evaluation of Bancshares and test
the market for Bancshares and the Chavannes'
stock by soliciting preliminary bids or
indications of interest in acquiring those
shares. Working through the Special Committee,
Chaffe and Associates contacted a number of
financial institutions and by March 3, 1994 had
received written offers from four financial
institutions that indicated a desire to acquire
Bancshares, one of which was from FCC.
On May 16, 1994, the Special Committee and
Chaffe and Associates presented to the Board of
Directors the four offers, and after discussion,
the Board of Directors authorized the Special
Committee to commence negotiations of a
definitive acquisition agreement with FCC. On
May 16, 1994, an agreement in principle was
signed and on July 14, 1994, the definitive
agreements constituting an agreement and plan of
merger (the "Prior Plan") were presented to the
Board of Directors of Bancshares for approval,
and it was approved. All outside members of the
Board of Directors (those persons who are not
members of management of Bancshares) voted in
favor of the Prior Plan and the Mergers.
Director Flanagan abstained from voting.
Director and then-LNB President Martin voted
against the Prior Plan and the Mergers.
Director and LNB Executive Vice President
Roberts voted against the Plan but in favor of
the Mergers and indicated in a written statement
delivered to the Board of Directors that his
decision to vote against the Prior Plan was
based on his belief that the Plan fails to
"address the proper compensation provisions for
staff and management needed to preserve the bid
price of $37.2 million."
The Prior Plan was then submitted to a vote
of Bancshares' shareholders at a special meeting
of shareholders on September 19, 1994, where it
was approved by the holders of 93% of the
outstanding Bancshares Common Stock. After the
Bancshares shareholders' meeting, it became
clear that in order to eliminate its concerns
regarding the competitive impact of the Mergers,
the staff of the Department of Justice would
require the divestiture of assets and
liabilities of LNB beyond that to which FCC had
agreed in the Prior Plan. Due to this position
and other uncertainties related to whether other
conditions of the Prior Plan could be met, FCC
and Bancshares renegotiated the Prior Plan so as
to resolve those uncertainties. The result of
these negotiations was that Bancshares and FCC
agreed to reduce the total dollar amount of FCC
Common Stock to be delivered to the Bancshares
shareholders in the Mergers. In return, FCC
agreed to accept most future risk related to
these uncertainties, including the uncertainty
of divestiture. The parties executed the Plan
on February 27, 1995.
In general, pursuant to the Prior Plan,
upon consummation of the Mergers, Bancshares'
shareholders would have been entitled to receive
in the aggregate a number of shares of FCC
Common Stock equal to approximately $37.0
million, based on the average sales price of a
share of FCC Common Stock as determined
immediately prior to the consummation of the
Mergers; provided that, if the average sales
price as so determined was less than $24, the
number used to calculate the exchange ratio
would have a floor of 24, and if the average
sales price as so determined was greater than
$33, the number used to calculate the exchange
ratio would have a cap of 33. Under the terms
of the Plan, the aggregate consideration to be
delivered to the Bancshares shareholders upon
consummation of the Mergers will be $30.0
million of FCC Common Stock, valued immediately
prior to consummation of the Mergers, with no
cap or floor on such average sales price, all as
more fully described in this Proxy Statement and
Prospectus. See "-Conversion of Bancshares
Common Stock."
All the outside directors of Bancshares
other than Malcolm Martin and all the members of
the Chavanne family have executed a joinder
agreement pursuant to which they have agreed,
among other things, to vote their shares of
Bancshares Common Stock in favor of the Plan and
not to compete with FCC and FNBLC for a period
of one year from the consummation date of the
Plan. See "- Joinder of Shareholders."
Director Flanagan has executed a Commitment and
Non-Competition Agreement whereby he has agreed
to vote his Bancshares Common Stock in favor of
the Plan, promote approval of the Plan among
Bancshares' shareholders, and not to compete
against FCC for a period of six months. See "-
Joinder of Shareholders."
Reasons for the Plan. In reaching its
determination that the Plan and the Mergers are
fair to, and in the best interest of, Bancshares
and its shareholders, the Board of Directors
consulted with its advisors, as well as with
Bancshares' management, and considered a number
of factors, including, without limitation, the
following:
a. The Board's familiarity with, and
review of, Bancshares' business operations,
earnings and financial condition;
b. The Board's conclusion that the
only practical way to resolve the seemingly
intractable disputes between Bancshares and
the Chavanne family was to sell Bancshares,
but only upon terms fair to all
shareholders of Bancshares;
c. The Board's belief that the terms
of the Plan are attractive and the Plan
allows Bancshares' shareholders to become
shareholders of FCC, the largest financial
institution headquartered in Louisiana,
whose stock is traded on the Nasdaq
National Market, and the recent earnings
performance of FCC;
d. FCC's and FNBLC's wide range of
banking products and services offered and
FCC's dividend payment history;
e. The Board's belief, based upon
analysis of the anticipated financial
effects of the Mergers, that upon
consummation of the Mergers, FCC and its
banking subsidiaries would be well
capitalized institutions, the financial
positions of which would be well in excess
of all applicable regulatory capital
requirements;
f. The current and prospective
economic and regulatory environment and
competitive constraints facing the banking
industry and financial institutions in
Bancshares' market area;
g. The recent business combinations
involving financial institutions, either
announced or completed, during the past
twelve months in the United States, the
State of Louisiana and nearby states;
h. The Board's belief that, in light
of the reasons discussed above, FCC's offer
as embodied in the Plan was the most
attractive choice for Bancshares;
i. Although the consideration to be
received by Bancshares' shareholders under
the Plan differs materially from the
consideration that would have been received
by Bancshares' shareholders under the Prior
Plan, the Board's belief that the Plan
remains in the best interests of
Bancshares' shareholders because
consummation of the Plan will result in
substantial divestiture of LNB's assets and
FCC has agreed to assume more business risk
associated with such divestiture and
Bancshares' operations between the date the
Plan was executed and its consummation; and
j. The expectation that the Mergers
will generally be tax-free transactions to
LNB, Bancshares and its shareholders. See
"Certain Federal Income Tax Consequences."
The Board of Directors of Bancshares did not
assign any specific or relative weight to the
foregoing factors in their considerations.
Opinion of Southard Financial
Bancshares retained Southard Financial
("Southard") to render its opinion as to the
fairness, from a financial point of view, to the
holders of Bancshares Common Stock of the
consideration to be paid pursuant to the
Mergers. Initially, Southard issued an opinion
that the proposed Mergers were fair as of August
3, 1994, based upon the terms of the Prior Plan
dated July 21, 1994. Since the date of the
August 3, 1994 opinion, Bancshares and FCC
negotiated and executed the Plan dated February
27, 1995 that contained substantially different
pricing terms from the Prior Plan. Southard's
opinion, discussed below, relates to the terms
of the Plan.
In connection with this engagement,
Southard evaluated the financial terms of the
Plan, but was not asked to, and did not,
recommend the specific exchange ratio and did
not assist in the negotiations of the terms of
the Plan. The exchange ratio was determined by
the board of directors of FCC and Bancshares
after arm's-length negotiations. Bancshares did
not place any limitations of the scope of
Southard's investigation or review.
Southard is a financial valuation
consulting firm, specializing in the valuation
of closely-held companies and financial
institutions. Since its founding in 1987,
Southard has provided approximately 1,000
valuation opinions for clients in 40 states and
provides valuation services for approximately
100 financial institutions annually.
Southard provided Bancshares' Board with a
fairness opinion letter and supporting
documentation. The full text of the opinion
letter of Southard, dated April 20, 1995, which
sets forth certain assumptions made, matters
considered, and limitations on the review
performed, is attached hereto as Appendix "B"
and is incorporated herein by reference. The
summary of the opinion of Southard set forth in
this Proxy Statement and Prospectus is qualified
in its entirety by reference to the opinion.
In arriving at its opinion, Southard
conducted interviews with officers of FCC and
Bancshares, and reviewed the documents indicated
in the fairness letter. Southard did not
independently verify the accuracy and/or the
completeness of the financial and other
information reviewed in rendering its opinion.
Southard did not, and was not requested to,
solicit third party indications of interest in
acquiring any or all the assets of Bancshares.
In connection with rendering its opinion,
Southard performed a variety of financial
analyses, which are summarized below. Southard
believes that its analyses must be considered as
a whole and that considering only selected
factors could create an incomplete view of the
analyses and the process underlying the opinion.
The preparation of a fairness opinion is a
complex process involving subjective judgments
and is not susceptible to partial analyses. In
its analyses, Southard made numerous
assumptions, many of which are beyond the
control of Bancshares and FCC. Any estimates
contained in the analyses prepared by Southard
are not necessarily indicative of future results
or values, which may vary significantly from
such estimates. Estimates of the value of
companies do not purport to be appraisals or
necessarily reflect the prices at which
companies or their securities may actually be
sold. None of the analyses performed by
Southard was assigned a greater significance
than any other.
Dividend Yield Analysis. In evaluating the
impact of the proposed Plan on the shareholders
of Bancshares, Southard reviewed the dividend
paying histories of Bancshares and FCC. Based
upon this review, it is reasonable to expect
that the shareholders of Bancshares, in total,
will receive dividends at or above the level
currently paid by Bancshares, after the Plan is
completed (defined as post-Plan combined
dividends per share times the exchange ratio).
Based upon 1994 dividend payments for FCC and
Bancshares and an exchange ratio of 2.30769
shares of FCC Common Stock for each share of
Bancshares Common Stock, the shareholders of
Bancshares would have seen an increase in 1994
dividends of 131%.
Earnings Yield Analysis. In evaluating the
impact of the proposed Plan on the shareholders
of Bancshares, Southard determined that, based
upon exchange ratio of 2.30769 shares of FCC
Common Stock for each share of Bancshares Common
Stock, the shareholders of Bancshares would have
seen an increase of 62% in their share of
earnings based upon reported 1994 earnings of
FCC and Bancshares. The analysis also suggests
expected higher earnings yields for Bancshares
shareholders in subsequent years if the Plan is
consummated.
Book Value Analysis. In evaluating the
impact of the proposed Plan on the shareholders
of Bancshares, Southard determined that the
shareholders of Bancshares would have seen an
increase in the book value of their investment
had the Plan been consummated prior to December
31, 1994. Reported book value of Bancshares at
December 31, 1994 was $33.60 per share.
Reported book value of FCC at December 31, 1994
was $15.71 per share. Had the Plan been
consummated prior to December 31, 1994, each
former Bancshares share would have book value of
$36.25 (FCC December 31, 1994 book value of
$15.71 per share times 2.30769). The resulting
book value of the investment in a Bancshares
share would be increased by 8%.
Analysis of Alternatives. In evaluating
the fairness of the proposed Merger to the
shareholders of Bancshares, Southard reviewed
other offers received for the purchase/merger of
Bancshares. Further, Southard considered recent
public market merger pricing information.
Analysis of Market Transactions. Based
upon the Plan terms, Bancshares shareholders
will receive 179% of December 31, 1994 book
value per share, and 19.23 times reported 1994
earnings. Based upon the review conducted by
Southard, the pricing for Bancshares in the Plan
is within the range of multiples seen in recent
bank acquisitions.
Fundamental Analysis. Southard reviewed
the financial characteristics of Bancshares and
FCC with respect to profitability, capital
ratios, liquidity, asset quality, and other
factors. Southard compared Bancshares and FCC
to a universe of publicly traded banks and bank
holding companies and to peer groups prepared by
the Federal Financial Institutions Examination
Council (FFIEC). Southard found that the post-
Plan combined entity will have capital ratios
and profitability ratios near those of the
public peer group.
Liquidity. Unlike Bancshares stock, shares
of FCC Common Stock to be received in the Plan
are actively traded on the Nasdaq National
Market. Further, except in the case of
officers, directors, and certain large
shareholders of Bancshares ("affiliated
parties"), FCC shares received will be freely
tradeable with no restrictions.
For rendering its opinion, Southard will
receive a fee of $4,500, plus reasonable out-of-
pocket expenses. Southard has never been
previously engaged by Bancshares or FCC, except
to issue the previously noted opinion regarding
the Prior Plan and to consult with Bancshares'
Board regarding the Plan. Neither Southard nor
its principals owns an interest in the
securities of Bancshares or FCC.
Conversion of Bancshares Common Stock
In consideration of the Mergers, each share
of Bancshares Common Stock outstanding on the
date the Mergers become effective (the
"Effective Date") will be converted into a
number of shares of FCC Common Stock equal to
the quotient of (a) (i) $30 million less the
Deductible Amount, as defined below, divided by
(ii) the Average Sales Price, as defined below,
of a share of FCC Common Stock, divided by (b)
the number of shares of Bancshares Common Stock
outstanding on the Effective Date.
As defined in the Plan, the term
"Deductible Amount" means the excess over
$200,000 of the sum of (a) all expenses of
Bancshares and/or LNB incurred on or after
December 6, 1994 through the Effective Time in
connection with the Plan or any of the
transactions contemplated thereby or otherwise
in connection with the potential sale of
Bancshares and LNB, other than the investment
banking fees and charges of Chaffe & Associates,
Inc. (the "Chaffe Fees"), plus (b) the greater
of $85,000 or the actual aggregate amount of the
Chaffe Fees incurred by Bancshares and/or LNB at
any time in connection with the Plan or any of
the transactions contemplated thereby or
otherwise in connection with the potential sale
of Bancshares and/or LNB (other than any such
fees which had been paid prior to September 30,
1994). As of the date hereof, it is Bancshares'
estimate that there will be no Deductible
Amount.
As defined in the Plan, the "Average Sales
Price" is the average of the closing per share
sales prices of FCC Common Stock for the 20
trading days ending on the fifth trading day
immediately prior to the closing date for the
Mergers, for which sales of FCC Common Stock
were reported on the National Association of
Securities Dealers Automated Quotation System
for securities listed for trading on the Nasdaq
National Market.
The following table sets forth examples of
the number of shares of FCC Common Stock into
which each share of Bancshares Common Stock
would be converted on the Effective Date,
assuming that on such date the Average Sales
Price for FCC Common Stock is as specified
below, and assuming no Deductible Amount.
Assumed Average Number of FCC
Sales Price of FCC Common Stock Shares Per Bancshares Share
$ 22 2.73
24 2.50
26 2.31
28 2.14
30 2.00
On April 21, 1995, the actual closing sales
price for a share of FCC Common Stock was
$28.50, and if such date had been the Effective
Date of the Mergers the Average Sales Price
would have been $25.78, assuming no Deductible
Amount.
Shareholders who perfect dissenters' rights
will not receive FCC Common Stock but instead
will be entitled to receive the "fair cash
value" of their shares as determined under
Section 131 of the Louisiana Business
Corporation Law (the "LBCL"). See "Dissenters'
Rights."
In lieu of the issuance of any fractional
share of FCC Common Stock to which a holder of
Bancshares Common Stock may be entitled, each
shareholder of Bancshares, upon surrender of the
certificate or certificates which immediately
prior to the Effective Date represented
Bancshares Common Stock held by such
shareholder, shall be entitled to receive a cash
payment (without interest) equal to such
fractional share multiplied by the Average Sales
Price.
For information regarding restrictions on
the transfer of securities received pursuant to
the Mergers applicable to certain Bancshares
shareholders, see "- Status under Federal
Securities Laws; Certain Restrictions on
Resales."
Effective Date
The Company Merger Agreement and the Bank
Merger Agreement have been executed. The Bank
Merger Agreement will be filed for recordation
with the Comptroller and the Bank Merger will be
effective at the time and date specified in a
certificate or other written record issued by
the Comptroller. The Company Merger Agreement
will be filed for recordation with the Secretary
of State of Louisiana as soon as practicable
after all conditions to the consummation of the
Mergers have been satisfied or waived and the
Holding Company Merger will be effective at the
date and time specified in a certificate issued
by the Secretary of State. It is intended that
the Holding Company Merger will be consummated
immediately prior to consummation of the Bank
Merger. FCC and Bancshares are not able to
predict the effective date of the Bank Merger or
the Holding Company Merger and no assurance can
be given that the transactions contemplated by
the Plan will be effected at any time. See "-
Regulatory Approvals and Other Conditions of the
Mergers."
Exchange of Certificates
On the Effective Date, each Bancshares
shareholder will cease to have any rights as a
shareholder of Bancshares and his sole rights
will pertain to the shares of FCC Common Stock
into which his shares of Bancshares Common Stock
have been converted pursuant to the Holding
Company Merger, except for any such shareholder
who exercises statutory dissenters' rights and
except for the right to receive cash for any
fractional shares. See "Dissenters' Rights."
Upon the consummation of the Mergers, a
letter of transmittal, together with
instructions for the exchange of certificates
representing shares of Bancshares Common Stock
for certificates representing shares of FCC
Common Stock will be mailed to each person who
was a shareholder of record of Bancshares on the
Effective Date of the Mergers. Shareholders are
requested not to send in their Bancshares Common
Stock certificates until they have received a
letter of transmittal and further written
instructions.
After the Effective Date and until
surrendered, certificates representing
Bancshares Common Stock will be deemed for all
purposes, other than the payment of dividends or
other distributions, if any, in respect of FCC
Common Stock, to represent the number of whole
shares of FCC Common Stock into which such
shares of Bancshares Common Stock have been
converted. FCC, at its option, may decline to
pay former shareholders of Bancshares who become
holders of FCC Common Stock pursuant to the
Holding Company Merger any dividends or other
distributions that may have become payable to
holders of record of FCC Common Stock following
the Effective Date until they have surrendered
their certificates evidencing ownership of
shares of Bancshares Common Stock. Any
dividends not paid after one year from the date
of payment will revert in ownership to FCC and
FCC will have no further obligation to pay such
dividends.
Bancshares' shareholders who cannot locate
their certificates are urged to contact promptly
Andrew J. Betz, Lakeside Bancshares, Inc., One
Lakeside Plaza, Lake Charles, Louisiana 70602,
telephone number (318) 433-2265. A new
certificate will be issued to replace the lost
certificate(s) only upon execution by the
shareholder of an affidavit certifying that his
or her certificate(s) cannot be located and an
agreement to indemnify Bancshares and FCC
against any claim that may be made against it or
FCC by the owner of the certificate(s) alleged
to have been lost or destroyed. Bancshares or
FCC may also require the shareholder to post a
bond in such sum as is sufficient to support the
shareholder's agreement to indemnify Bancshares
and FCC.
Regulatory Approvals and Other Conditions of the
Mergers
In addition to shareholder approval,
consummation of the Mergers will require the
approvals of the Board of Governors of the
Federal Reserve System (the "Reserve Board") and
the Comptroller. FCC filed an application
seeking the approval of the Reserve Board with
respect to the Holding Company Merger and an
application seeking the approval of the Bank
Merger by the Comptroller on March 27, 1995.
FCC expects to receive the approvals in the
third quarter of 1995; however, there can be no
assurance that the approvals will be obtained by
that time or at all.
If the required approvals are obtained, the
Mergers are subject to review by the U.S.
Department of Justice, which may seek to enjoin
the Mergers or require divestitures of assets if
it believes the Mergers would have certain anti-
competitive effects in the Lake Charles market.
Representatives of the Department of Justice
have expressed concerns about the effect of the
Mergers. In an effort to eliminate any concern
about the competitive impact of the Mergers,
FNBLC and LNB have entered into a Purchase and
Assumption Agreement (the "P&A Agreement"),
dated as of March 21, 1995, pursuant to which,
subject to certain conditions, immediately prior
to consummation of the Mergers, two of LNB's
branches will be acquired by Jeff Davis Bank &
Trust Company. FCC and FNBLC have also agreed
in the Plan that if other divestitures are
required, FCC and FNBLC will use their
reasonable best efforts to successfully
negotiate an appropriate divestiture agreement
(a "Divestiture Agreement") with a qualified
acquiror on acceptable terms. While FCC
believes that these efforts should
satisfactorily address the concerns of the
Department of Justice in a manner that would
permit the Mergers to proceed, there is no
assurance that they will do so.
The obligations of each of the parties to
the Plan are also subject to other conditions
set forth in the Plan, including, among others:
(i) the receipt of an opinion of Arthur Andersen
& Co. as to certain tax aspects of the Mergers;
(ii) the receipt of customary legal opinions;
(iii) that prior to the Effective Date there not
have been a material adverse change in the
financial condition, results of operations,
business or prospects of the other party's
consolidated group; and (iv) that on the date of
closing the representations and warranties made
in the Plan by each party are true and correct
in all material respects.
The Plan provides that the following will
not be considered to be a material adverse
change in Bancshares' financial condition,
results of operations, business or prospects:
(i) any adverse change occurring as a result of
a loan that was approved by FCC in accordance
with the Plan or resulting from the transfer of
employees of Bancshares or LNB to positions at
FNBLC; or (ii) any of the following events
occurring after the date of the Plan, provided
that they do not result from a breach by
Bancshares or LNB of any of their respective
covenants in the Plan: (A) decreases in
Bancshares' deposits, (B) decreases in
Bancshares' net earnings, (C) deterioration in
the quality of Bancshares' portfolios of loans,
leases (as lessor), other real estate and/or
securities, (D) any departures of employees
(including officers) of Bancshares or LNB, and
(E) other adverse changes in the financial
condition, results of operations, business or
prospects of Bancshares' consolidated group that
do not exceed in the aggregate $200,000.
The obligation of FCC and FNBLC to
consummate the Mergers is also conditioned upon,
among other things, (i) that neither FCC's
independent public accountants, Arthur Andersen
LLP, nor the SEC shall have taken the position
that FCC is not permitted to account for the
Mergers as a pooling-of-interests; (ii) receipt
of a comfort letter from Bancshares' independent
public accountants; (iii) confirmation from the
directors, executive officers and certain
shareholders of Bancshares as to certain
representations and covenants previously made by
them in certain Joinders of Shareholders
discussed further herein (see "The Plan -
Joinder of Shareholders"); (iv) that the
transaction contemplated by the P&A Agreement
and any other Divestiture Agreement shall have
been consummated or shall be consummated
simultaneously with the Closing; (v) that by the
later of five days after the date of the Special
Meeting or any date specified by FCC upon not
less than five days advance notice to Bancshares
and LNB, Messrs. Roberts and Betz and Ms.
Beasley shall have either left the employment of
Bancshares and LNB or shall have executed non-
competition agreements with FCC and FNBLC, and
(vi) that the non-competition agreement executed
by Mr. Flanagan shall be in full force and
effect and enforceable in accordance with its
terms.
The Companies intend to consummate the
Mergers as soon as practicable after all of the
conditions to the Mergers have been met or
waived; however, there can be no assurance that
the conditions to the Mergers will be satisfied.
Conduct of Business Prior to the Effective Date
Bancshares and LNB have agreed pursuant to
the Plan that, prior to the Effective Date,
each will conduct its business only in the
ordinary course and that, without the prior
written consent of the Chief Executive Officer
of FCC or his duly authorized designee, and
except as otherwise provided in the Plan, each
will not, among other things, (a) declare or pay
any dividend, other than Bancshares' regular
semi-annual dividend, which will not exceed
$0.55 per share, except that if the Effective
Date is prior to June 16, 1995 (the record date
for both the next Bancshares semi-annual and the
next FCC quarterly dividend, if either is
declared), in lieu of receiving a dividend from
Bancshares, the Bancshares shareholders will be
entitled to receive a dividend from FCC (if
declared), or change the number of outstanding
shares of its capital stock; (b) amend its
articles of incorporation or bylaws or adopt or
amend any resolution or agreement concerning
indemnification of its directors and officers;
(c) merge or consolidate with another entity, or
sell or dispose of a material part of its
assets, or except in the ordinary course of
business, sell any of its assets; (d) dispose of
investment securities having an aggregate market
value greater than 2% of the aggregate value of
its investment portfolio on September 30, 1994
or make investments in noninvestment grade
securities or which are inconsistent with past
investment practices; (e) charge off or sell
(except for a price not less than the book value
thereof) any loans, discounts or financing
leases, unless required by law, regulatory
authorities or generally accepted accounting
principles; (f) sell any asset held by LNB as
other real estate or other foreclosed assets for
an amount less than 100% of its book value as of
September 30, 1994 or that as of such date had a
book value in excess of $25,000; (g) enter into
or modify any agreement pertaining to
compensation arrangements with its present or
former directors, officers or employees or
increase the compensation of such persons except
that, (i) LNB may accrue at a rate of up to
$12,500 per month from January 1, 1995 through
the Effective Date for the payment of employee
bonuses to (A) persons employed by LNB in
connection with operations which are divested by
it who remain employed by LNB through but not
after the time of such divestiture and either
are not offered employment by the purchaser or
become employed by the purchaser and remain
employed by such purchaser at the Effective Time
of the Mergers, and (B) other persons (including
Messrs. Roberts and Betz and Ms. Beasley) who
are employees of LNB at the Effective Time of
the Mergers and do not voluntarily leave the
employ of FNBLC prior to the earlier of (X) 45
days after the Effective Date or (Y) the date on
which the conversion of the computer systems of
LNB to FNBLC has been completed; (ii) Bancshares
or LNB may make payments pursuant to its
severance plan; (iii) LNB may honor the
employment contracts with Messrs. Flanagan,
Roberts and Betz and Ms. Beasley; and (iv) LNB
may commit to make contributions to its employee
stock ownership plan at the rate of up to
$16,666 per month; (h) except in the ordinary
course of business consistent with past
practices, place any material mortgage, pledge
or other encumbrance on any of its assets or
cancel any material indebtedness owing to it or
any claims which it may possess, or waive any
right of substantial value or discharge or
satisfy any material noncurrent liability other
than debts, claims, rights or liabilities not
exceeding in the aggregate $25,000; (i) make any
extension of credit which, together with all
other extensions of credit to the borrower and
its affiliates, would exceed $500,000, or,
without reasonable prior notice to FCC, commit
to make any extensions of credit in excess of
$250,000; (j) fail to pay, or make adequate
provision for the payment of, all taxes,
interest payments and penalties due and payable
except those being contested in good faith by
appropriate proceedings and for which sufficient
reserves have been established; or (k) enter
into any new line of business.
In addition, Bancshares and LNB have agreed
that, without the prior approval of FCC, they
will not solicit, initiate or encourage
inquiries or proposals with respect to, or
furnish any information relating to or
participate in any negotiations or discussions
regarding any acquisition or purchase of all or
a substantial portion of the assets of, or a
substantial equity interest in, or any business
combination with Bancshares or LNB, other than
as contemplated by the Plan; provided, that
nothing will prohibit any officer or director of
Bancshares or LNB from taking any action that in
the written opinion of counsel to Bancshares or
LNB is required to discharge such officer's or
director's fiduciary duties. Each of Bancshares
and LNB has also agreed to instruct its
officers, directors, agents and affiliates to
refrain from doing any of the above and to
notify FCC immediately if any such inquiries or
proposals are received by, any such information
is requested from, or any negotiations or
discussions are sought to be initiated with it
or any of its officers, directors, agents and
affiliates.
Pursuant to the Plan, FNBLC has loaned one
of its employees to LNB to serve in an interim
capacity as a senior officer acting solely at
the direction of LNB's chief executive officer
and Board of Directors to assist LNB in
preserving its business and the goodwill of its
customers. The term of the loan will expire on
the earlier of the Effective Date of the Mergers
or the earlier termination of the loan by FNBLC
or LNB. Neither FCC nor FNBLC will have any
liability for any act or failure to act by the
employee.
Waiver, Amendment and Termination
The Plan provides that the parties thereto
may waive any of the conditions to their
respective obligations to consummate the Mergers
other than the receipt of necessary regulatory
approvals, the effectiveness of the registration
statement of which this Proxy Statement and
Prospectus is a part, and shareholder approval
of the Plan as prescribed by law. A waiver must
be in writing and approved by the Board of
Directors of the waiving party.
The Plan, including all related agreements,
may be amended or modified at any time, before
or after its approval by the shareholders of
Bancshares, by the mutual agreement in writing
of the Boards of Directors of the parties to the
Plan; provided that, under Louisiana law, any
amendment made subsequent to such shareholder
approval may not alter the amount or type of
shares into which Bancshares' stock will be
converted, alter any term of the Articles of
Incorporation of FCC, or alter any term or
condition of the Plan in a manner that would
adversely affect any shareholder of Bancshares.
Additionally, the Plan may be amended at any
time by the sole action of the chief executive
officers of the respective parties to the Plan
to correct typographical errors or other
misstatements that are not material to the
substance of the transaction contemplated by
such parties.
The Plan may be terminated at any time
prior to the Effective Date by (i) the mutual
consent of the respective Boards of Directors of
FCC and Bancshares; (ii) by the Board of Direc-
tors of either FCC or Bancshares in the event of
a material breach or material anticipatory
breach by any member of the consolidated group
of the other of them of any representation,
warranty or covenant contained in the Plan which
cannot be cured by the earlier of 10 days after
written notice of such breach or the date
specified in subparagraph (iii)(A) hereof; (iii)
either FCC or Bancshares if (A) all conditions
to consummating the Mergers required by the Plan
have not been met or waived, cannot be met, or
the Mergers have not occurred by June 30, 1995;
provided that, if at that date or at any time
within 15 days prior thereto there remain any
conditions to Closing that involve any
regulatory or other governmental agency, then
such date shall be extended until the earlier of
the 15th day after all such conditions are
fulfilled or August 31, 1995, or (B) any such
condition, other than any involving any
regulatory or other governmental agency cannot
be met by June 30, 1995 and has not been waived
by each party in whose favor such condition runs
or (C) any condition involving any regulatory or
other governmental agency cannot be met by
August 31, 1995; (iv) FCC or FNBLC if the number
of shares of Bancshares Common Stock as to which
holders thereof have perfected dissenters'
rights, together with the number of such shares
as to which the holders are entitled to receive
cash payments in lieu of fractional shares
exceeds, in the aggregate, 9.9% of the total
number of outstanding shares of Bancshares
Common Stock on the date of the closing, (v) the
Board of Directors of either FCC or FNBLC if the
Board of Directors of Bancshares (A) withdraws,
modifies or changes its recommendation to its
shareholders regarding the Plan and the Mergers
or shall have resolved or resolves to do any of
the foregoing, (B) recommends to its
shareholders (a) any merger, consolidation,
share exchange, business combination or other
similar transaction (other than transactions
contemplated by the Plan), (b) any sale, lease,
transfer or other disposition of all or
substantially all of the assets of any member of
Bancshares' consolidated group, or (c) any
acquisition, by any person or group, of
beneficial ownership of 15% or more of any class
of Bancshares capital stock, or (C) makes any
announcement of a proposal, plan or intention or
agreement to do any of the foregoing or
agreement to engage in any of the foregoing; or
(vi) the Board of Directors of Bancshares if
certain filings or other communications or
actions relating to obtaining the necessary
regulatory approvals of the Mergers are not made
or taken within the time frames set forth in the
Plan.
Interests of Certain Persons in the Merger
Pursuant to the Plan, FCC and FNBLC have
agreed that, following the Effective Time, they
will indemnify each person who as of February
27, 1995 served as an officer or director of
Bancshares or LNB or has served as a director at
any time since January 1, 1990 (an "Indemnified
Person") from and against all damages,
liabilities, judgments and claims, and related
expenses, based upon or arising out of such
person's capacity as an officer or director of
Bancshares or LNB to the same extent as he would
have been indemnified under the Articles of
Association (or Articles of Incorporation) or
By-laws of Bancshares or LNB, as appropriate, as
such Articles or By-laws were in effect on July
21, 1994.
The aggregate amount of indemnification
payments required to be made by FCC and FNBLC
pursuant to the Plan is $5 million; however,
this limit does not apply to damages,
liabilities, judgments and claims arising out of
or based upon (i) a misstatement by FCC or FNBLC
of a material fact in the registration statement
of which this Proxy Statement and Prospectus is
a part; or (ii) any omission by FCC or FNBLC of
a material fact required to be stated in the
registration statement of which this Proxy
Statement and Prospectus is a part or necessary
in order to make a statement therein not
misleading, unless such misstatement or omission
was based upon information supplied by
Bancshares or LNB. Indemnification otherwise
required to be paid by FCC or FNBLC will be
reduced by any amounts that the Indemnified
Person recovers by virtue of the claim for which
indemnification is sought and no Indemnified
Person is entitled to indemnification for any
claim made prior to the closing of the Mergers
of which the Indemnified Person, Bancshares or
LNB was aware but did not disclose FCC or FNBLC.
Receipt of the indemnification benefits by
directors and officers of Bancshares and LNB is
conditioned upon their execution of the
agreements described in more detail under the
heading captioned "The Plan - Joinder of
Shareholders." Any claim for indemnification
pursuant to the Plan must be submitted in
writing to FCC's chief executive officer
promptly upon such Indemnified Person becoming
aware of such claim. The Plan provides that
this indemnification provision specifically
applies to any claims relating to that certain
lawsuit entitled Martin v. Lakeside Bancshares,
Inc. et. al. (discussed further below), or any
subsequent litigation filed by Mr. Martin
involving substantially the same claim. The
Plan further provides that no claim may be
settled without the prior consent of FCC or
FNBLC.
LNB President and Chief Executive Officer
Tom Flanagan, Executive Vice President Joseph W.
Roberts, Jr., Senior Vice President and Trust
Officer Andrew J. Betz, and Senior Vice
President Deanna K. Beasley are parties to
separate employment contracts with LNB. The
contracts with Messrs. Roberts and Betz and Ms.
Beasley were amended on October 31, 1994 and
expire on December 31, 1995. The contract with
Mr. Flanagan commenced on October 31, 1994 and
expires on the earlier of December 31, 1995 or
the closing of the Mergers. The contracts call
for the employment of each of the specified
persons for the specified terms; however, LNB
may in its discretion at any time during the
term of the contract terminate the employment of
the affected employee and, in the case of Mr.
Flanagan, deliver to him title to his company
car, and in the case of the other officers, pay
that employee in a lump sum a separation payment
that varies in amount depending on whether the
employee is terminated with or without cause;
provided however that no payment shall be made
if the employee is indicted for a criminal
offense in connection with his or her conduct at
LNB. The contracts define "cause" as including
the refusal or failure of the employee to
execute a noncompetition agreement prohibiting
competition by the employee for a period not to
exceed six months if requested by an acquiring
institution.
It is a condition to FCC's obligation to
consummate the Plan that the three officers of
LNB who are parties to the employment contracts
other than Mr. Flanagan must have either
executed a non-competition agreement with FCC or
have left the employment of Bancshares and LNB
in all capacities other than as directors of
Bancshares by the later of five days after the
date of the Special Meeting or any date
specified by FCC upon not less than five days
advance notice to Bancshares and LNB. Mr.
Roberts, Mr. Betz and Ms. Beasley are all
expected to sign non-competition agreements.
Former LNB President and Chief Executive
Officer Malcolm D. Martin was a party to an
employment contract and Bancshares' Board or
management determined that under his contract,
upon his termination, Mr. Martin would receive a
lump-sum payment of approximately $89,000. In a
letter to the LNB Board dated July 13, 1994 from
his attorney, Mr. Malcolm Martin expressed the
view that in light of his performance and long
and faithful service the Board should award him
a severance payment of three times his annual
compensation rather than the amount specified in
his contract. The Board declined to amend his
contract in this respect and believes that Mr.
Martin has no valid claim to any amount other
than as specified in the contract.
In a subsequent letter, Mr. Martin also
stated among other things, his belief that the
severance "package" described in the original
proxy statement and prospectus provided to
Bancshares' shareholders for himself and Mr.
Roberts as well as other employees and staff of
LNB is significantly less than the package
"earlier promised." The Board believes that Mr.
Martin's characterization is incorrect.
Moreover, any additional payments beyond what is
set forth in the LNB severance plan and the
employment contracts would have been deducted
from the value to be received by shareholders of
LNB in the Mergers, and representatives of the
Chavanne group indicated that they were
unwilling to vote in favor of a transaction that
would so reduce shareholder value.
On August 17, 1994, Mr. Martin filed suit
against Bancshares, claiming that because of
alleged commitments by LNB's Compensation and
Benefit Committee to him, he would be entitled
to more money upon termination than the terms of
his employment contract provided. Mr. Martin's
employment was terminated on August 22, 1994.
Pursuant to the Plan, FCC is entitled to control
the defense of this lawsuit; provided that any
settlement entered into prior to the Effective
Date must have the mutual consent of FCC and
Bancshares. Mr. Martin has not to the Board's
knowledge asserted any legal entitlement to
payments beyond those to which he would be
entitled under the contract, and the Board
continues to believe that he has no valid claim
to any amount other than as specified in his
contract.
It is the present intent of FNBLC to cause
Mr. Flanagan to become an advisory director of
FNBLC following consummation of the Mergers.
Joinder of Shareholders
As a condition to consummation of the
Mergers, each Bancshares' director and executive
officer (other than Malcolm Martin) and certain
principal shareholders (except as noted below),
including without limitation shareholders owning
5% or more of Bancshares Common Stock and Mary
Ellen Chavanne, Hazel Prince Chavanne, Claire C.
Turner, Harry J. Chavanne, Jeannie C. McGann and
David P. Chavanne, has executed an individual
agreement (the "Joinder Agreement") pursuant to
which he has agreed solely in his capacity as a
shareholder of Bancshares (i) to vote in favor
of the Plan and against any other proposal
relating to the sale or disposition of LNB or
Bancshares unless FCC or FNBLC is in breach or
default in any material respect of any covenant,
representation or warranty contained in the
Plan; (ii) not to transfer any of the shares of
Bancshares Common Stock over which he has
dispositive power, or grant any proxy thereto
not approved by FCC, until the earlier of the
Effective Date or the date that the Plan has
been terminated, except for transfers by
operation of law or transfers in connection with
which the transferee agrees to be bound by the
Joinder of Shareholders; (iii) not to deal in
FCC Common Stock or other securities of FCC
until the earlier of the Effective Date or the
date the Plan has been terminated; (iv) to
release, as of the Effective Date, FCC and FNBLC
from any obligation that either of them may have
to indemnify such shareholder for acts taken as
an officer, director or employee of any member
of Bancshares' consolidated group, except to the
extent set forth in the Plan; and (v) not to
serve as a director, officer, employee or
advisor of, or have any investment in any
financial institution that competes with the
business of LNB as continued by FNBLC for a
period of one year following the Effective Date;
however, such person may continue to hold any
investment that he held on the date of the
Joinder Agreement and may make an investment in
any such financial institution if the investment
does not materially enhance the ability of the
financial institution to compete with FNBLC.
Messrs. Roberts and Betz and Ms. Beasley have
executed a Joinder Agreement that does not
contain an agreement not to compete, and Mr.
Flanagan has executed a Commitment and Non-
Competition Agreement in lieu of a Joinder
Agreement that contains an agreement not to
compete for six months following the Effective
Date.
Employee Benefits
Pursuant to the Plan, FCC has agreed that,
from and after the Effective Date, FCC or FNBLC
will offer to all persons who were employees of
Bancshares or LNB immediately prior to the
Effective Date and who become employees of FNBLC
following the Mergers, the same employee
benefits as are offered by FCC or FNBLC to
employees of FNBLC, except that there will not
be a waiting period for coverage under the First
Commerce Corporation Flexible Benefit Plan or
any of its constituent plans, including the
First Commerce Corporation Medical and Dental
Care Plan, and no employee of LNB who is an
active employee on the Effective Date will be
denied such benefits for a pre-existing
condition. Full credit shall be given for prior
service by Bancshares and LNB employees for
eligibility vesting purposes under FCC's benefit
plans and policies, except that credit for prior
service will not be given for eligibility,
vesting or benefit accrual purposes under FCC's
retirement plan. In addition, all benefits
accrued through the Effective Date under
Bancshares' and LNB's benefit plans will be paid
by FCC or FNBLC to the extent such benefits are
not otherwise provided to such employees under
the benefit plans of FCC or FNBLC.
Bancshares has amended its Employee Stock
Ownership Plan ("ESOP") and will amend its
401(k) Plan to provide that all participants in
these plans who are still employed by Bancshares
or LNB on the date of the Plan will be fully
vested in their accounts in those plans as of
the Effective Date of the Mergers. FCC will
take all reasonable actions necessary after the
Effective Date of the Mergers to maintain the
qualification and tax exempt status of the ESOP
and the 401(k) Plan and to meet all other
requirements of applicable law and regulations
and the provisions of the plans until they are
terminated or combined with FCC's plans.
Neither FCC nor FNBLC will otherwise be
obligated to continue any employee benefit plan
maintained by Bancshares or LNB.
Bancshares and LNB have adopted a severance
plan. If the Plan is consummated, an employee
covered by the Plan will be entitled to a
severance payment if any of the following
occurs: (1) the employee remains employed full-
time by LNB until the Effective Date and prior
to the Effective Date the employee had not
received an offer of employment from FNBLC to
begin immediately after the Effective Date as
other than a temporary employee at 100% of that
employee's base rate of pay in effect on
December 31, 1994; (2) the employment of the
employee is terminated without cause by LNB
prior to the Effective Date and FNBLC notifies
LNB in writing that it is satisfied that the
termination was not for the purpose of providing
severance benefits; or (3) the employment of an
employee is terminated without cause within one
year after the Effective Date. Cause is defined
generally to mean misconduct, commission of a
crime, poor job performance and the like. The
amount of severance to be received by an
employee who is entitled to severance will be
based on a formula that takes into account that
employee's length of full-time employment with
LNB and his or her salary. Generally, an
employee entitled to severance will receive one
week's pay for each year of full-time employment
with LNB.
Other than as specified in the above
described severance plan or in certain
employment contracts and bonus arrangements
described elsewhere herein, employees of
Bancshares and LNB are not entitled to severance
payments.
Expenses
The Plan provides that regardless of
whether the Mergers are consummated, expenses
incurred in connection with the Plan and the
transactions contemplated thereby shall be borne
by the party that has incurred them, except for
expenses that are included in the Deductible
Amount.
Status Under Federal Securities Laws; Certain
Restrictions on Resales
The shares of FCC Common Stock to be issued
to shareholders of Bancshares pursuant to the
Plan have been registered under the Securities
Act of 1933 (the "Securities Act") thereby
allowing such shares to be freely traded without
restriction by persons who will not be
"affiliates" of FCC or who were not "affiliates"
of Bancshares, as that term is defined in the
Securities Act.
Directors and certain officers of
Bancshares may be deemed to be "affiliates"
within the meaning of the Securities Act. Such
persons will not be able to resell the FCC
Common Stock received by them pursuant to the
Holding Company Merger unless such stock is
registered for resale under the Securities Act
or an exemption from the registration re-
quirements of the Securities Act is available.
All such persons should carefully consider the
limitations imposed by Rules 144 and 145
promulgated under the Securities Act prior to
effecting any resales of FCC Common Stock.
Bancshares has agreed to use its best efforts to
cause all such affiliates to enter into agree-
ments not to sell shares of FCC Common Stock
received by them in violation of the Securities
Act.
Further, in accordance with the
requirements of the pooling-of-interests method
of accounting, Bancshares shareholders who are
deemed "affiliates" will not be permitted to
sell the shares of FCC Common Stock received by
them in consideration of the Mergers until at
least 30 days of combined earnings of FCC and
Bancshares have been published by FCC.
Accounting Treatment
It is a condition to FCC's obligation to
consummate the Mergers that neither FCC's
independent public accountants nor the SEC shall
have taken the position that FCC is not
permitted to account for the Mergers as a
pooling-of-interests under the requirements of
Opinion No. 16 of the Accounting Principles
Board of the American Institute of Certified
Public Accountants and the published rules and
regulations of the Securities and Exchange
Commission (the "Commission") for accounting and
financial reporting purposes. Under the
pooling-of-interests method of accounting, after
certain adjustments necessary to conform the
basis of presentation of the FCC and Bancshares
information, the recorded assets and liabilities
of FCC and Bancshares will be carried forward to
FCC's consolidated financial statements at their
recorded amounts, the consolidated earnings of
FCC will include earnings of FCC and Bancshares
for the entire fiscal year in which the Mergers
occur and the reported earnings of FCC and
Bancshares for prior periods will be combined
and restated as consolidated earnings of FCC.
See "- Regulatory Approvals and Other Conditions
of the Mergers" and "- Status Under Federal
Securities Laws; Certain Restrictions on
Resales."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of
material federal income tax consequences to
holders of Bancshares Common Stock resulting
from the Mergers. The discussion set forth
below is based upon applicable federal law and
judicial and administrative interpretations on
the date hereof, any of which is subject to
change at any time.
Consummation of the Mergers is conditioned
upon receipt by the Companies of an opinion from
Arthur Andersen LLP to the following effects,
among others:
(a) Each of the Mergers qualifies as a
reorganization under Section 368(a)(1)(A) of the
Internal Revenue Code (the "Code"), and
Bancshares, LNB, FCC and FNBLC each will be a
"party to a reorganization" within the meaning
of Section 368(b) of the Code.
(b) No material gain or loss will be
recognized by Bancshares, LNB, FCC or FNBLC as a
result of the Mergers.
(c) No gain or loss will be recognized by
a shareholder of Bancshares on the receipt
solely of FCC Common Stock in exchange for his
shares of Bancshares Common Stock.
(d) The basis of the shares of FCC Common
Stock to be received by Bancshares' shareholders
pursuant to the Holding Company Merger will, in
each instance, be the same as the basis of the
shares of Bancshares Common Stock surrendered in
exchange therefor, increased by any gain
recognized on the exchange.
(e) The holding period of the shares of
FCC Common Stock to be received by Bancshares'
shareholders pursuant to the Holding Company
Merger will, in each instance, include the
holding period of the respective shares of
Bancshares Common Stock exchanged therefor,
provided that the shares of Bancshares Common
Stock are held as capital assets on the date of
the Holding Company Merger.
(f) The payment of cash to Bancshares'
shareholders in lieu of fractional share
interests of FCC Common Stock will be treated as
if the fractional shares were distributed as
part of the exchange and then redeemed by FCC.
These cash payments will be treated as having
been received as a distribution in redemption of
that fractional share interest subject to the
conditions and limitations of Section 302 of the
Code. If a fractional share of FCC Common Stock
would constitute a capital asset in the hands of
a redeeming shareholder, any resulting gain or
loss will be characterized as capital gain or
loss in accordance with the provisions and
limitations of Subchapter P of Chapter 1 of the
Code.
(g) A Bancshares' shareholder who perfects
his statutory right to dissent from the Holding
Company Merger and who receives solely cash in
exchange for his Bancshares Common Stock will be
treated as having received such cash payment as
a distribution in redemption of his shares of
Bancshares Common Stock, subject to the
provisions and limitations of Section 302 of the
Code. After such distribution, if the former
Bancshares shareholder does not actually or
constructively own any Bancshares Common Stock,
the redemption will constitute a complete
termination of interest and be treated as a
distribution in full payment in exchange for the
Bancshares Common Stock redeemed.
The opinion of Arthur Andersen LLP is not
binding on the Internal Revenue Service (the
"IRS"), which could take positions contrary to
the conclusions in such opinion.
As a result of the complexity of the tax
laws, and because the tax consequences to any
particular shareholder may be affected by
matters not discussed herein, it is recommended
that each shareholder of Bancshares consult his
personal tax advisor concerning the applicable
federal, state and local income tax consequences
of the Mergers.
DISSENTERS' RIGHTS
Unless the Plan is approved by the holders
of at least 80% of the total voting power of
Bancshares, Section 131 of the LBCL allows a
shareholder of Bancshares who objects to the
Holding Company Merger and who complies with the
provisions of that section to dissent from the
Holding Company Merger and to have paid to him
in cash the fair cash value of his shares of
Bancshares Common Stock as of the day before the
Special Meeting, as determined by agreement be-
tween the shareholder and FCC or by the state
district court for the Parish of Orleans if the
shareholder and FCC are unable to agree upon the
fair cash value.
To exercise the right of dissent, a
shareholder (i) must file with Bancshares a
written objection to the Plan prior to or at the
Special Meeting and (ii) must also vote his
shares (in person or by proxy) against the Plan
at the Special Meeting. Neither a vote against
the Plan nor a specification in a proxy to vote
against the Plan will in and of itself consti-
tute the necessary written objection to the
Plan. Moreover, by voting in favor of, or
abstaining from voting on, the Plan, or by
returning the enclosed proxy without instructing
the proxy holders to vote against the Plan, a
shareholder waives his rights under Section 131.
The right to dissent may be exercised only by
the record owners of the shares and not by
persons who hold shares only beneficially.
Beneficial owners who wish to dissent to the
Holding Company Merger should have the record
ownership of the shares transferred to their
names or instruct the record owner to follow the
Section 131 procedure on their behalf.
If the Plan is approved by less than 80% of
the total number of shares of Bancshares Common
Stock outstanding, then promptly after the
Effective Date written notice of the
consummation of the Holding Company Merger will
be given by registered mail to each former
shareholder of Bancshares who filed a written
objection to the Plan and voted against it.
Within 20 days after the mailing of such notice,
the shareholder must file with FCC a written
demand for payment for his shares at their fair
cash value as of the day before the Special
Meeting and must state the amount demanded and a
post office address to which FCC may reply. He
must also deposit the certificate(s) formerly
representing his shares of Bancshares Common
Stock in escrow with a bank or trust company
located in Orleans Parish, Louisiana. With the
above-mentioned demand, the shareholder must
also deliver to FCC the written acknowledgement
of such bank or trust company that it holds the
certificate(s), duly endorsed and transferred to
FCC, upon the sole condition that the certifi-
cate(s) will be delivered to FCC upon payment of
the value of the shares in accordance with
Section 131.
Unless the shareholder objects to and votes
against the Holding Company Merger, demands
payment, deposits his certificates and delivers
the required acknowledgment in accordance with
the procedures and within the time periods set
forth above, the shareholder will conclusively
be presumed to have acquiesced to the Mergers
and will forfeit any right to seek payment
pursuant to Section 131.
If FCC does not agree to the amount de-
manded by the shareholder, or does not agree
that payment is due, it will, within 20 days
after receipt of such demand and acknowl-
edgement, notify such shareholder in writing of
either (i) the value it will agree to pay or
(ii) its belief that no payment is due. If the
shareholder does not agree to accept the offered
amount, or disagrees with FCC's assertion that
no payment is due, he must, within 60 days after
receipt of such notice, file suit against FCC in
the Civil District Court for the Parish of
Orleans for a judicial determination of the fair
cash value of the shares. Any shareholder en-
titled to file such suit may, within such 60-day
period but not thereafter, intervene as a
plaintiff in any suit filed against FCC by
another former shareholder of Bancshares for a
judicial determination of the fair cash value of
such other shareholder's shares. If a
shareholder fails to bring or to intervene in
such a suit within the applicable 60-day period,
he will be deemed to have consented to accept
FCC's statement that no payment is due or, if
FCC does not contend that no payment is due, to
accept the amount specified by FCC in its notice
of disagreement.
If upon the filing of any such suit or
intervention FCC deposits with the court the
amount, if any, which it specified in its notice
of disagreement, and if in that notice FCC
offered to pay such amount to the shareholder on
demand, then the costs (not including legal
fees) of the suit or intervention will be taxed
against the shareholder if the amount finally
awarded to him, exclusive of interest and costs,
is equal to or less than the amount so
deposited; otherwise, the costs (not including
legal fees) will be taxed against FCC.
Upon filing a demand for the value of his
shares, a shareholder ceases to have any rights
of a shareholder except the rights created by
Section 131. The shareholder's demand may be
withdrawn voluntarily at any time before FCC
gives its notice of disagreement, but thereafter
only with the written consent of FCC. If his
demand is properly withdrawn, or if the
shareholder otherwise loses his dissenters'
rights, he will be restored to his rights as a
shareholder as of the time of filing of his
demand for fair cash value.
Prior to the Effective Date, dissenting
shareholders of Bancshares should send any
communications regarding their rights to Joseph
W. (Bill) Roberts, Jr., Lakeside Bancshares,
Inc., One Lakeside Plaza, Lake Charles,
Louisiana 70602. On or after the Effective
Date, dissenting shareholders should send any
communications regarding their rights to Thomas
L. Callicutt, Jr., Senior Vice President and
Controller, First Commerce Corporation, 210
Baronne Street, New Orleans, Louisiana 70112.
All such communications should be signed by or
on behalf of the dissenting shareholder in the
form in which his shares are registered on the
books of Bancshares. FCC has the right to
terminate the Plan if the number of shares of
Bancshares Common Stock as to which the holders
thereof have perfected dissenters' rights,
together with the number of shares as to which
the holders are entitled to receive cash
payments in lieu of fractional shares exceeds in
the aggregate 9.9% of the total number of
outstanding shares of Bancshares Common Stock on
the date of closing.
The foregoing summary of Section 131 of the
LBCL is necessarily incomplete and is qualified
in its entirety by reference to excerpts from
that section set forth herein as Appendix C.
INFORMATION ABOUT BANCSHARES
The following documents, or the indicated
portions thereof, have been filed by Bancshares
with the Commission and are incorporated by
reference into this Proxy Statement and
Prospectus: Bancshares' most recent annual
report to shareholders; Bancshares' Annual
Report on Form 10-K for the fiscal year ended
December 31, 1994 (a copy of which has been
furnished herewith to each Bancshares
shareholder), and Bancshares' Current Reports on
Form 8-K filed on March 14, 1995 and March 30,
1995.
In addition, all other documents filed by
Bancshares with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the
Securities and Exchange Act of 1934 (the
"Exchange Act") between the date of this Proxy
Statement and Prospectus and the date of the
Special Meeting shall be deemed to be
incorporated herein by reference from the date
of filing. See "Available Information" for
information with respect to securing copies of
documents incorporated by reference in this
Proxy Statement and Prospectus by Bancshares and
not delivered herewith.
Any statement contained in a document
incorporated or deemed to be incorporated by
reference shall be deemed to be modified or
superseded to the extent that a statement
contained herein or in any other document
subsequently filed and incorporated or deemed to
be incorporated by reference herein modifies or
supersedes the statement. Any statement so
modified or superseded shall not be deemed,
except as so modified or superseded, to
constitute a part of this Proxy Statement and
Prospectus.
INFORMATION ABOUT FCC
The following documents, or the indicated
portions thereof, have been filed by FCC with
the Commission, and are incorporated by
reference into this Proxy Statement and
Prospectus: FCC's Annual Report on Form 10-K
for the fiscal year ended December 31, 1994; the
description of FCC Common Stock set forth in
FCC's Applications for Registration on Form 8-A
filed with the Commission on November 9, 1972
and December 22, 1976, as amended by a report on
Form 8 filed with the Commission on June 19,
1989 and by a report on Form 8-A/A filed with
the Commission on August 12, 1993, and FCC's
Current Report on Form 8-K filed on March 3,
1995, as amended by Form 8-K/A filed on April 3,
1995, and FCC's Current Report on Form 8-K filed
on May __, 1995.
In addition, all other documents that will
be filed by FCC with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act between the date of this Proxy
Statement and Prospectus and the date of the
Special Meeting shall be deemed to be
incorporated herein by reference from the date
of filing. See "Available Information" for
information with respect to securing copies of
documents incorporated by reference in this
Proxy Statement and Prospectus.
Any statement contained in a document
incorporated or deemed to be incorporated by
reference shall be deemed to be modified or
superseded to the extent that a statement
contained herein or in any other document
subsequently filed and incorporated or deemed to
be incorporated by reference herein modifies or
supersedes such statement. Any statement so
modified or superseded shall not be deemed,
except as so modified or superseded, to
constitute a part of this Proxy Statement and
Prospectus.
COMPARATIVE RIGHTS OF SHAREHOLDERS
If the shareholders of Bancshares approve
the Plan and the Mergers are subsequently
consummated, all shareholders of Bancshares,
other than those exercising dissenters' rights,
will become shareholders of FCC and their rights
will be governed by and be subject to the
Articles of Incorporation and By-laws of FCC
rather than the Articles of Incorporation and
By-laws of Bancshares. The following is a brief
summary of certain of the principal differences
between the rights of shareholders of FCC and
Bancshares not described elsewhere herein.
Preferred Stock
The Board of Directors of FCC is
authorized, without action of its shareholders,
to issue FCC preferred stock (the "FCC Preferred
Stock") from time to time and to establish the
designations, preferences and relative, optional
or other special rights and qualifications,
limitations and restrictions thereof, as well as
to establish and fix variations in the relative
rights as between holders of any one or more
series of such FCC Preferred Stock. The
authority of the Board of Directors includes but
is not limited to the determination or fixing of
the following with respect to each series of FCC
Preferred Stock which may be issued: (i) the
designation of such series; (ii) the number of
shares initially constituting such series; (iii)
the dividend rate and conditions and the
dividend preferences, if any, in respect of the
FCC Common Stock and among the series of FCC
Preferred Stock; (iv) whether, and upon what
terms, the FCC Preferred Stock would be
convertible into or exchanged for shares of any
other class or other series of the same class;
(v) whether, and to what extent, holders of one
or more shares of a series of FCC Preferred
Stock will have voting rights; and (vi) the
restrictions, if any, that are to apply on the
issue or reissue of any additional FCC Preferred
Stock.
Shares of FCC Preferred Stock that are
authorized would be available for issuance in
connection with the acquisition of other
businesses, infusion of capital, or for other
lawful corporate purposes, at the discretion of
the Board of Directors. The Board of Directors
could issue FCC Preferred Stock to a person or
persons who would support management in
connection with a proxy contest to replace an
incumbent director or in opposition to an
unsolicited tender offer. As a result, such
proposals or tender offers could be defeated
even though favored by the holders of a majority
of the FCC Common Stock. As of December 31,
1994, FCC had 2,398,170 shares of Series 1992
Preferred Stock outstanding.
The Articles of Incorporation of Bancshares
do not authorize the issuance of preferred
stock.
Shareholders' Meetings
FCC's Articles of Incorporation and By-laws
provide that upon the written request of holders
of a majority of the voting power of FCC, the
secretary shall call a special meeting of
shareholders. Bancshares' Articles of
Incorporation provide that the Board of
Directors or any three or more shareholders
owning an aggregate of at least 10% of the
voting power of Bancshares may call a special
meeting of shareholders at any time.
Preemptive Rights
Bancshares' Articles of Incorporation
provide that holders of common stock shall have
the preemptive right to subscribe to any and all
share of Bancshares common stock authorized from
time to time at such prices and on such terms
and conditions as may be fixed by Bancshares'
Board of Directors. Such preemptive rights must
be exercised in the ratio which the number of
shares held by each shareholder bears to the
total number of shares outstanding. FCC's
Articles of Incorporation do not provide for
preemptive rights.
Stock Dividends
Bancshares' Articles of Incorporation
provide that the declaration of dividends
payable in Bancshares Common Stock must be
approved by the affirmative vote of at least
two-thirds of the outstanding Bancshares Common
Stock.
FCC's Articles of Incorporation and By-laws
have no such provision.
Voting of Stock of Subsidiary
Bancshares' Articles of Incorporation
contain a provision that makes certain Louisiana
statutes applicable if shareholders of
Bancshares holding shares representing less than
two-thirds of the vote cast, vote to direct
Bancshares to vote shares it owns in any fifty
percent or more owned subsidiary in favor of any
merger, consolidation or voluntary transfer of
substantially all the assets of any such
subsidiary. The effect of these Louisiana
statutes essentially is to assure that
shareholders of Bancshares have dissenters'
rights as provided under Louisiana law if less
than two-thirds of the shares vote in favor of
such action and such action is approved. See
"Dissenters' Rights."
FCC's Articles of Incorporation and By-laws
have no such provision.
Board Nominations
Bancshares' By-laws provide that
nominations, other than those made by or on
behalf of the existing management of Bancshares,
must be made in writing and delivered or mailed
to the President of Bancshares not less than the
close of business on the seventh calendar day
following the day on which notice of any meeting
of Bancshares' shareholders called for the
election of directors was mailed.
FCC's Articles of Incorporation and By-laws
do not contain any such nomination procedures.
Election of Directors
Directors receiving the affirmative vote of
a majority of the outstanding stock of
Bancshares are elected to Bancshares' board.
Further, Bancshares' Articles of Incorporation
provide for cumulative voting in the election of
directors. FCC's directors are elected by
plurality vote. FCC's shareholders do not have
cumulative voting rights in the election of
directors.
Limitation of Personal Liability of Directors
and Officers
The Articles of Incorporation of FCC
contain a provision limiting the personal
liability of FCC's directors and officers under
certain circumstances (the "Limitation of
Liability Provision"). Pursuant to the
Limitation of Liability Provision, the officers
and directors of FCC have no personal liability
to FCC or its shareholders for monetary damages
for breach of their fiduciary duty as a director
or officer of FCC except for (a) any breach of
the director's or officer's duty of loyalty to
FCC or its shareholders, (b) acts or omissions
not in good faith or which involve intentional
misconduct or a knowing violation of law, (c)
liability under Section 92(D) of the LBCL
(pertaining generally to acts related to an
unlawful stock repurchase or payment of a
dividend) or (d) any transaction from which the
director or officer derived an improper personal
benefit.
The Limitation of Liability Provision also
provides that any subsequent amendment or repeal
or the adoption of any inconsistent provision
cannot retroactively eliminate or reduce the
protection it provides directors and officers
with regard to claims that arise after the
effective date of the proposed amendment but
before any such subsequent amendment, repeal or
adoption of any inconsistent provision.
Additionally, while a two-thirds vote of FCC's
voting power present is required generally to
amend its Articles of Incorporation, 80% of the
total voting power of FCC is required to amend
or repeal the Limitation of Liability Provision.
Bancshares' Articles of Incorporation
contain a similar limitation of liability
provision, but the affirmative vote of two-
thirds of the outstanding Bancshares Common
Stock is required to amend this provision as
well as any other provision of its Articles of
Incorporation.
Fair Price Protection Statute
FCC is subject to Louisiana's Fair Price
Protection Statute (Sections 132 - 134 of the
LBCL), which requires that, in addition to any
vote otherwise required by law or a
corporation's articles of incorporation, any
"business combination" (as defined in the
statute) between a corporation and the holder of
10% or more of its total voting power be
recommended by the corporation's Board of
Directors and approved by (i) at least 80% of
the total voting power of the corporation and
(ii) at least two-thirds of the votes entitled
to be cast by shareholders other than the 10%
shareholder, unless certain minimum price, form
of consideration and procedural requirements are
satisfied by the 10% shareholder, or if the
Board approves the business combination before
the 10% shareholder becomes a 10% shareholder.
The provisions of this statute are not
applicable to Bancshares.
LEGAL MATTERS
Correro, Fishman & Casteix, L.L.P., New
Orleans, Louisiana, has rendered its opinion
that the shares of FCC Common Stock to be issued
in connection with the Holding Company Merger
have been duly authorized and, if and when
issued pursuant to the terms of the Plan, will
be validly issued, fully paid and non-
assessable.
EXPERTS
The audited consolidated financial
statements of Bancshares and its subsidiary
incorporated by reference in this Proxy
Statement and Prospectus have been audited by
Gragson, Casiday & Guillory, independent public
accountants, as indicated in their report with
respect thereto, and have been incorporated by
reference in reliance upon the authority of such
firm as experts in accounting and auditing.
The audited consolidated financial
statements of FCC and its subsidiaries
incorporated by reference in this Proxy
Statement and Prospectus have been audited by
Arthur Andersen LLP, independent public
accountants, as indicated in their report with
respect thereto, and have been so incorporated
by reference in reliance upon the authority of
such firm as experts in accounting and auditing.
OTHER MATTERS
At the time of the preparation of this
Proxy Statement and Prospectus, Bancshares had
not been informed of any matters to be presented
by or on behalf of Bancshares or its management
for action at the Special Meeting other than
those listed in the Notice of Special Meeting of
Shareholders and referred to herein. If any
other matters come before the meeting or any
adjournment thereof, the persons named in the
enclosed proxy will vote on such matters
according to their best judgment.
Shareholders are urged to sign the enclosed
proxy, which is solicited on behalf of the Board
of Directors of Bancshares, and return it at
once in the enclosed envelope.
BY ORDER OF THE BOARD OF DIRECTORS
_______________________________
Tom Flanagan, President
Lake Charles, Louisiana
May ____, 1995
<PAGE>
FIRST COMMERCE CORPORATION
PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(Unaudited)
In addition to its pending merger with Lakeside Bancshares, Inc.,
First Commerce Corporation recently completed mergers with First
Bancshares, Inc. and City Bancorp, Inc., both of which are described
below. The unaudited pro forma condensed combined balance sheet as of
December 31, 1994 and the unaudited pro forma condensed combined
statements of income for the years ended December 31, 1994, 1993 and
1992 appearing on the following pages give effect to the pending merger
of Lakeside Bancshares, Inc.(Bancshares) and the First Bancshares, Inc.
(First) and City Bancorp, Inc. (City) mergers into First Commerce
Corporation (FCC). A brief description of each of the mergers follows.
FCC and Bancshares have signed a definitive agreement to merge the
two companies and their respective subsidiaries, The First National Bank
of Lake Charles (FNBLC) and Lakeside National Bank of Lake Charles
(LNB). Shareholders of Lakeside will receive shares of FCC Common Stock
with a value of approximately $30 million. The number of shares will be
determined at the time the mergers are effected.
On February 17, 1995, First, the parent company of First Bank,
Slidell, Louisiana, merged into FCC in exchange for 2,705,537 shares
of FCC common stock. First Bank was merged into First National Bank of
Commerce (FNBC), a wholly owned subsidiary of FCC.
On February 17, 1995, City, the parent company of City Bank and Trust
Company, New Iberia, Louisiana (City Bank), merged into FCC in exchange
for 516,100 shares of FCC common stock. City Bank was merged into The
First National Bank of Lafayette, a wholly owned subsidiary of FCC. FCC
has repurchased shares of common stock equal to the number of shares
issued for the City acquisition.
The First merger was accounted for as a pooling-of-interests. The
City merger was accounted for using the purchase method of accounting,
and the Bancshares merger is expected to be accounted for as a
pooling-of-interests. The following pro forma financial statements
have been prepared to reflect the consummation of all of the described
mergers.
No provision has been made in the pro forma financial statements for
nonrecurring charges or credits directly related to the mergers. Such
charges are estimated to be $2.5 million, after taxes. Certain direct
costs of the mergers which have been incurred and included in the pro
forma financial statements are approximately $2 million, after taxes.
The unaudited pro forma condensed combined balance sheet includes
adjustments directly attributable to the proposed mergers based on
estimates derived from information currently available.
The proforma financial statements do not purport to be indicative
of the financial position or results of operations that would actually
have been obtained if the mergers had been in effect at such dates or
for such periods, or of the results that may be obtained in the future.
<PAGE>
<TABLE>
<CAPTION>
FIRST COMMERCE CORPORATION
PRO FORMA CONDENSED COMBINED BALANCE SHEET (UNAUDITED)
December 31, 1994
(In thousands)
Historical
----------------------------------------------------- Pro Pro
City Bancshares Forma Forma
FCC Bancshares First (Unaudited) Divestiture<FN1> Adjustments<FN2> Combined
------------- ----------- ---------- ------------ ------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and due from banks $ 397,376 $ 16,348 $ 11,165 $ 4,673 $ (6,904) $ (13,759)<FN3> 408,899
Interest-bearing deposits
in other banks 138 4,846 143 99 - - 5,226
Securities held to
maturity 8,800 39,644 3,084 9,031 - - 60,559
Securities available
for sale 2,458,443 8,856 35,224 16,885 - - 2,519,408
Trading account
securities 8,970 - - - - - 8,970
Federal funds sold and
securities purchased
under resale agreements 38,200 9,120 28,030 2,250 - - 77,600
Loans and leases, net of
unearned income 3,236,653 91,616 150,511 44,033 (25,534) - 3,497,279
Allowance for loan losses (53,656) (3,038) (2,277) (581) - - (59,552)
------------- ----------- ------------ ----------- ------------- ------------ ------------
Net loans and leases 3,182,997 88,578 148,234 43,452 (25,534) 3,437,727
Premises and equipment 117,441 8,205 5,718 1,828 (701) - 132,491
Goodwill and other
intangible assets 15,118 - - - - 6,047 <FN4> 21,165
Other assets 331,207 1,497 12,612 837 (105) - 346,048
------------- ----------- ------------ ----------- ------------- ------------ ------------
Total assets $ 6,558,690 $ 177,094 $ 244,210 $ 79,055 $ (33,244) $ (7,712) $ 7,018,093
============= =========== ============ =========== ============= ============ ============
LIABILITIES
Noninterest-bearing
deposits $ 1,226,752 $ 46,494 $ 43,507 $ 16,056 $ (11,067) $ - $ 1,321,742
Interest-bearing
deposits 4,231,318 113,185 174,932 50,562 (25,735) - 4,544,262
------------- ----------- ------------ ----------- ------------- ------------ ------------
Total deposits 5,458,070 159,679 218,439 66,618 (36,802) 5,866,004
Short-term borrowings 470,483 20 491 4,036 - - 475,030
Other liabilities 70,135 593 4,607 689 1,218 - 77,242
Long-term debt 88,956 - - - - - 88,956
------------- ----------- ------------ ----------- ------------- ------------ ------------
Total liabilities 6,087,644 160,292 223,537 71,343 (35,584) 6,507,232
------------- ----------- ------------ ----------- ------------- ------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock 59,954 - - - - - 59,954
Common stock 130,963 1,250 848 500 - 16,818 <FN5> 150,379
Capital surplus 137,671 2,500 3,823 2,504 - (19,825)<FN5> 126,673
Retained earnings 214,808 13,248 16,495 5,230 2,340 (5,230)<FN5> 246,891
Unearned restricted stock
compensation (592) - - - - - (592)
Treasury stock - - (3) - - 3 <FN5> -
Unrealized gain(loss) on
securities available
for sale (71,758) (196) (490) (522) - 522 <FN5> (72,444)
------------- ----------- ------------ ----------- ------------- ------------ ------------
Total stockholders'
equity 471,046 16,802 20,673 7,712 2,340 (7,712) 510,861
------------- ----------- ------------ ----------- ------------- ------------ ------------
Total liabilities and
stockholders'
equity $ 6,558,690 $ 177,094 $ 244,210 $ 79,055 $ (33,244) $ (7,712) $ 7,018,093
============= =========== ============ =========== ============= ============ ============
(See accompanying notes)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME (UNAUDITED)
Year Ended December 31, 1994
(In thousands, except share data)
Historical
------------------------------------------------------------ Pro Pro
City Forma Forma
FCC Bancshares First (Unaudited) Adjustments Combined
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Interest income $ 408,004 $ 11,533 $ 19,978 $ 5,899 $ - $ 445,414
Interest expense 151,743 2,724 4,784 1,931 - 161,182
------------- ------------- ------------- ------------- ------------- -------------
Net interest income 256,261 8,809 15,194 3,968 - 284,232
Provision for loan losses (11,568) - 125 175 - (11,268)
------------- ------------- ------------- ------------- ------------- -------------
Net interest income after
provision for loan losses 267,829 8,809 15,069 3,793 - 295,500
Other income 66,885 3,238 2,549 823 - 73,495
Operating expense 241,362 9,710 12,354 3,300 403<FN6> 267,129
------------- ------------- ------------- ------------- ------------- -------------
Income (loss) before income tax expense 93,352 2,337 5,264 1,316 (403) 101,866
Income tax expense 29,668 775 2,186 458 - 33,087
------------- ------------- ------------- ------------- ------------- -------------
Net income (loss) 63,684 1,562 3,078 858 (403) 68,779
Preferred dividend requirements 4,347 - - - - 4,347
------------- ------------- ------------- ------------- ------------- -------------
Income (loss) applicable to common share$ 59,337 $ 1,562 $ 3,078 $ 858 $ (403) $ 64,432
============= ============= ============= ============= ============= =============
Earnings per share <FN7>
Primary $ 2.25 $ 3.12 $ 3.63 $ 8.58 $ 2.13
Fully diluted $ 2.19 $ 3.12 $ 3.63 $ 8.58 $ 2.08
Weighted average shares outstanding <FN7>
Primary 26,317,242 500,000 847,658 100,000 30,200,404
Fully diluted 29,111,621 500,000 847,658 100,000 32,994,783
(See accompanying notes)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME (UNAUDITED)
Year Ended December 31, 1993
(In thousands, except share data)
Historical
--------------------------------------------- Pro Pro
Forma Forma
FCC Bancshares First Adjustments Combined<FN9>
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Interest income $ 393,334 $ 11,999 $ 20,640 $ - $ 425,973
Interest expense 143,324 3,207 5,030 - 151,561
------------- ------------- ------------- ------------- -------------
Net interest income 250,010 8,792 15,610 - 274,412
Provision for loan losses (4,504) - (1,300) - (5,804)
------------- ------------- ------------- ------------- -------------
Net interest income after
provision for loan losses 254,514 8,792 16,910 - 280,216
Other income 102,421 3,256 2,544 - 108,221
Operating expense 221,080 9,764 10,586 - 241,430
------------- ------------- ------------- ------------- -------------
Income before income tax expense 135,855 2,284 8,868 - 147,007
Income tax expense 40,641 822 2,919 - 44,382
------------- ------------- ------------- ------------- -------------
Net income <FN8> 95,214 1,462 5,949 - 102,625
Preferred dividend requirements 4,348 - - - 4,348
------------- ------------- ------------- ------------- -------------
Income applicable to common shares $ 90,866 $ 1,462 $ 5,949 $ - $ 98,277
============= ============= ============= ============= =============
Earnings per share <FN7>
Primary $ 3.48 $ 2.92 $ 7.02 $ 3.27
Fully diluted $ 3.18 $ 2.92 $ 7.02 $ 3.04
Weighted average shares outstanding <FN7>
Primary 26,132,211 500,000 847,787 30,015,373
Fully diluted 32,125,003 500,000 847,787 36,008,165
(See accompanying notes)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME (UNAUDITED)
Year Ended December 31, 1992
(In thousands, except share data)
Historical
--------------------------------------------- Pro Pro
Forma Forma
FCC Bancshares First Adjustments Combined
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Interest income $ 398,701 $ 13,593 $ 20,495 $ - $ 432,789
Interest expense 163,348 4,798 6,682 - 174,828
------------- ------------- ------------- ------------- -------------
Net interest income 235,353 8,795 13,813 - 257,961
Provision for loan losses 22,040 675 680 - 23,395
------------- ------------- ------------- ------------- -------------
Net interest income after
provision for loan losses 213,313 8,120 13,133 - 234,566
Other income 96,627 4,167 2,106 - 102,900
Operating expense 203,781 10,383 9,785 - 223,949
------------- ------------- ------------- ------------- -------------
Income before income tax expense and
minority interest 106,159 1,904 5,454 - 113,517
Income tax expense 32,766 689 1,774 - 35,229
------------- ------------- ------------- ------------- -------------
Income before minority interest 73,393 1,215 3,680 - 78,288
Earnings of minority interest 918 - - - 918
------------- ------------- ------------- ------------- -------------
Net income 72,475 1,215 3,680 - 77,370
Preferred dividend requirements 4,076 - - - 4,076
------------- ------------- ------------- ------------- -------------
Income applicable to common shares $ 68,399 $ 1,215 $ 3,680 $ - $ 73,294
============= ============= ============= ============= =============
Earnings per share<FN7>
Primary $ 2.88 $ 2.43 $ 4.34 $ 2.65
Fully diluted $ 2.70 $ 2.43 $ 4.34 $ 2.53
Weighted average shares outstanding<FN7>
Primary 23,728,540 500,000 847,787 27,611,702
Fully diluted 29,568,365 500,000 847,787 33,451,527
</TABLE>
(See accompanying notes)
<PAGE>
NOTES TO PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS (Unaudited)
<FN1> In order to eliminate any concern about the competitive impact of
the proposed merger, FCC and Bancshares have committed to the
divestiture of two branches of LNB as required by regulators. The
sale of the two branches will include loans, deposits, premises
and equipment, and cash related to the branches. The amounts shown
represent the estimated book values of the assets and liabilities
to be sold as result of these divestitures, for a premium of $3.6
million before taxes. The pro forma combined income statements
do not reflect any adjustments for the divestiture. Any such
adjustments are estimated to be immaterial to the results of
operations of the pro forma combined financial statements.
<FN2> To calculate pro forma information, it has been assumed that the
number of outstanding shares of FCC Common Stock includes shares
issued or to be issued upon consummation of the mergers. In
connection with the Lakeside merger, FCC will issue shares of
its common stock to the shareholders of Lakeside. Under the
terms of the proposed merger with Lakeside, the number of shares
of FCC Common Stock to be delivered will be determined by
reference to the average of the closing sales prices of a share
of FCC Common Stock for the 20 trading days ending on the fifth
trading day before the closing date for the merger. For purposes
of these pro formas , the conversion rate has been assumed to be
2.36 based on the average closing sales prices of a share of FCC
common stock for the 20 trading days ending April 18, 1995
of $25.48. The total number of shares issued in the transaction
with First was 2,705,537. The total number of shares issued in
the transaction with City was 516,100. FCC has repurchased shares
equal to the number issued in the City transaction at a weighted
average price of $26.66.
<FN3> Reflects the cost to repurchase the shares issued in conjunction
with the City merger.
<FN4> To record the estimated excess cost over fair value of City's net
assets of $6.0 million as required by generally accepted
accounting principles. For purposes of these pro formas, it has
been assumed that the adjustment from book values to fair values
for City would not be material; therefore these adjustments have
not been reflected.
<FN5> Calculation of Pro Forma Capital. As required by generally
accepted accounting principles under the pooling-of-interests
method of accounting, FCC's Common Stock account has been
decreased by the balance in common stock for Lakeside and First
and increased by the par value of the FCC common stock issued and
assumed to be issued under the mergers. As required by generally
accepted accounting principles under the purchase method of
accounting, stockholders' equity has been decreased by the balance
in City's stockholders' equity accounts. An analysis of these
adjustments follows (in thousands):
<TABLE>
<CAPTION>
Stockholders' Equity
_____________________________________________________________________
Loss On
Securities Total
Common Capital Retained Treasury Available Stockholders'
December 31, 1994 Stock Surplus Earnings Stock For Sale Equity
_________________ _____________________________________________________________________
<S> <C> <C> <C> <C> <C> <C>
Bancshares (A) 5,888 $ (2,138) $ - $ - $ - $ 3,750
(1,250) (2,500) - - - (3,750)
First (B) 13,528 (8,860) - - - 4,668
(848) (3,823) - 3 - (4,668)
City (C) - - - - - -
(500) (2,504) (5,230) - 522 (7,712)
_____________________________________________________________________
Total 16,818 $ (19,825) $(5,230) $ 3 $ 522 $ (7,712)
=====================================================================
</TABLE>
(A) Issuance of 1,177,625 shares of FCC common stock for 500,000
shares of Bancshares common stock in a transaction accounted
for as a pooling-of-interests. FCC's common stock account has
been decreased by the balance in Bancshares' common stock
account ($1,250,000) and increased by the par value of the FCC
common stock issued ($5,888,000).
(B) Issuance of 2,705,537 shares of FCC common stock for 848,658
shares of First common stock in a transaction accounted for as
a pooling-of-interests. FCC's common stock account has been
decreased by the balance in First's common stock account
($848,000) and increased by the par value of the FCC common
stock issued ($13,528,000).
(C) Issuance of 516,100 shares of FCC common stock for 100,000
shares of City common stock in a transaction accounted for as
a purchase. FCC has repurchased shares equal to the number
issued in the City transaction. Common stock has been
decreased by the balance in City's common stock account
($500,000). Excess cost over fair value of approximately
$6 million will be recorded as a result of this transaction.
<PAGE>
NOTES TO PRO FORMA CONDENSED COMBINED (continued)
FINANCIAL STATEMENTS (Unaudited)
<FN6> To record the excess cost over fair value for the City merger of
$6,047,000. The excess cost is being amortized over 15 years on
a straight-line basis.
<FN7> Pro forma earnings per share have been computed on the pro forma
combined weighted average shares outstanding. Pro forma combined
weighted average shares outstanding include weighted average
outstanding shares of FCC Common Stock, after adjustment for
shares of FCC Common Stock issued or assumed to be issued in
connection with the mergers. Income for primary earnings per
share is adjusted for preferred stock dividends. Income for
fully diluted earnings per share is adjusted for interest related
to convertible debentures, net of the related income tax effect,
and preferred stock dividends.
<FN8> Bancshares and First adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" in 1993 and
reported the cumulative effect of this change in their respective
1993 consolidated statements of income. The effect of this change
was a $131,000 decrease in net income for Bancshares and a $40,000
increase in net income for First. These amounts are not considered
to be components of ongoing results and, accordingly, have not been
included in the historical or combined pro forma amounts presented.
<FN9> The Pro Forma Condensed Combined Statements of Income for 1993 and
1992 reflect only those mergers accounted for under the pooling-of-
interests method of accounting.
<PAGE>
APPENDIX A
SELECTED PORTIONS
OF
AGREEMENT AND PLAN OF MERGER
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement") is made as
of February 27, 1995, between First Commerce Corporation, a
Louisiana corporation ("FCC"), and its wholly-owned subsidiary,
First National Bank of Lake Charles, a national banking
association ("FNBLC"), on the one hand, and Lakeside Bancshares,
Inc., a Louisiana corporation ("Holding"), and its wholly-owned
subsidiary, Lakeside National Bank of Lake Charles, a national
banking association ("Bank"), on the other.
WHEREAS, the Board of Directors of FCC and the Board of
Directors of Holding have each determined that it is desirable
and in the best interests of the corporation and its shareholders
that Holding merge into FCC (the "Holding Company Merger") on the
terms and subject to the conditions set forth in this Agreement
and in the joint agreement of merger attached hereto as Exhibit A
(the "Holding Company Merger Agreement"); and
WHEREAS, the Board of Directors of FNBLC and the Board of
Directors of Bank have each determined that it is desirable and
in the best interests of the institution and its sole shareholder
that, immediately following the Holding Company Merger, Bank
merge into FNBLC (the "Bank Merger" and, together with the
Holding Company Merger, collectively called the "Mergers") on the
terms and subject to the conditions set forth in this Agreement
and in the agreement of merger attached hereto as Exhibit B (the
"Bank Merger Agreement" and, together with the Holding Company
Merger Agreement, collectively called the "Merger Agreements").
NOW THEREFORE, in consideration of the representations,
warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
SECTION 1
Mergers and Closing
1.01 Holding Company Merger. Simultaneously with the
execution of this Agreement, FCC and Holding have entered into
the Holding Company Merger Agreement, pursuant to which Holding
will, subject to the conditions stated herein and therein, merge
into FCC, which shall be the surviving corporation.
1.02 Bank Merger. Simultaneously with the execution of this
Agreement, FNBLC and Bank have entered into the Bank Merger
Agreement, pursuant to which Bank will, subject to the conditions
stated herein and therein, merge into FNBLC, which shall be the
surviving association.
1.03 The Closing. The "Closing" of the transactions
contemplated hereby will take place in the Board Room of FCC,
Third Floor, 210 Baronne Street, New Orleans, Louisiana 70112,
at 10:00 a.m., New Orleans Time, on a mutually agreeable date as
soon as practicable following satisfaction of the conditions set
forth in subparagraphs (a), (b) and (d) of subsection 6.01
hereof, or if no date has been agreed to, on any date specified
by any party to the others upon ten days notice following
satisfaction of such conditions. The date on which the Closing
occurs is herein called the "Closing Date". If all conditions
set forth in Section 6 hereof are satisfied or waived by the
party entitled to grant such waiver, at the Closing (a) FCC and
FNBLC, on the one hand, and Holding and Bank, on the other hand,
shall each provide to the other such proof or indication of
satisfaction of the conditions set forth in Section 6 as the
party whose obligations are conditioned upon such satisfaction
may reasonably request, (b) the certificates, letters and
opinions required by Section 6 shall be delivered, (c) the
appropriate officers of the parties shall execute, deliver and
acknowledge the Merger Agreements and (d) the parties shall take
such further action as is required to consummate the transactions
contemplated by this Agreement and the Merger Agreements. If on
any date established for the Closing all conditions in Section 6
hereof have not been satisfied or waived by the party entitled to
grant such waiver, then any party, on one or more occasions, may
declare a delay of the Closing of such duration, not exceeding 10
business days, as the declaring party shall select, but no such
delay shall extend beyond the date provided in clause (i) of
subsection 7.01(c), and no such delay shall interfere with the
right of any party to declare a termination pursuant to Section
7.
1.04 The Effective Date and Time. The Holding Company
Merger Agreement shall be filed with and recorded by the
Secretary of State of Louisiana immediately following (or
concurrently with) the Closing, and the Holding Company Merger
shall be effective at the date and time specified in the Holding
Company Merger Agreement and, in any event, prior to the
effective time of the Bank Merger. The Bank Merger Agreement
shall be filed and recorded as provided by law immediately
following (or concurrently with) the Closing, and the Bank Merger
will be effective at the time specified in a certificate or other
written record issued by the Office of the Comptroller of the
Currency ("OCC"). The date on which and the time at which the
Holding Company Merger becomes effective are herein referred to
as the "Effective Date" and the "Effective Time," respectively.
SECTION 2
Conversion of Stock of Holding
2.01 Conversion of Stock of Holding. Except for shares as
to which dissenters' rights have been perfected and not withdrawn
or otherwise forfeited under Section 131 of the Louisiana
Business Corporation Law (the "BCL"), on the Effective Date, by
reason of the Holding Company Merger, each issued and outstanding
share of the common stock, $2.50 per share par value, of Holding
("Holding Common Stock") shall be converted as set forth in
Section 4 of the Holding Company Merger Agreement.
SECTION 3
Representations and
Warranties of Holding and Bank
Holding and Bank represent and warrant to FCC and FNBLC
that, except as set forth in the corresponding subsection of the
Schedule of Exceptions (the "Schedule of Exceptions") that
Holding and Bank have delivered to FCC and FNBLC concurrently
with the execution and delivery of this Agreement:
3.01 Consolidated Group; Organization; Qualification.
Holding's "consolidated group", as such term is used in this
Agreement, consists of Holding and Bank. Holding is a
corporation duly organized and validly existing under the laws of
the State of Louisiana and is a bank holding company within the
meaning of the Bank Holding Company Act of 1956, as amended (the
"Bank Holding Company Act"). Bank is a national banking
association duly organized and validly existing under the laws of
the United States. Each member of Holding's consolidated group
has all requisite corporate power and authority to own and lease
its property and to carry on its business as it is currently
being conducted and is qualified and in good standing as a
foreign corporation in all jurisdictions in which the failure to
so qualify would have a material adverse effect on such member's
financial condition, results of operations, business or
prospects.
3.02 Capital Stock; Other Interests. The authorized capital
stock of Holding consists of 500,000 shares of Holding Common
Stock, of which 500,000 shares are issued and outstanding and no
shares are held in its treasury. The authorized capital stock of
Bank consists of 500,000 shares of common stock, $2.50 par value
per share, of which 500,000 shares are issued and outstanding and
no shares are held in its treasury. All issued and outstanding
shares of capital stock of each member of Holding's consolidated
group have been duly authorized and are validly issued, fully
paid and (except as provided in 12 U.S.C. Section 55) non-
assessable, and all of the outstanding shares of each such member
(other than Holding) are owned by Holding, free and clear of
all liens, charges, security interests, mortgages, pledges
and other encumbrances. No member of Holding's consolidated
group has outstanding any stock options or other rights to
acquire any shares of its capital stock or any security
convertible into such shares, or has any obligation or commitment
to issue, sell or deliver any of the foregoing or any shares of
its capital stock. The capital stock of each member of Holding's
consolidated group has been issued in compliance with all legal
requirements and in compliance with any preemptive or similar
rights. No member of Holding's consolidated group has a
subsidiary or direct or indirect ownership interest exceeding
5% in any firm, corporation, partnership or other business
except for interests in any other such member.
3.03 Corporate Authorization; No Conflicts. Subject to the
approval of this Agreement and the Holding Company Merger
Agreement by the shareholders of Holding in accordance with the
BCL, all corporate acts and other proceedings required of each
member of Holding's consolidated group for the due and valid
authorization, execution, delivery and performance of this
Agreement and the Merger Agreements and consummation of the
Mergers have been validly and appropriately taken. This
Agreement and the Bank Merger Agreement have been approved by
Holding as sole shareholder of Bank. Subject to their approval
by the shareholders of Holding and to such regulatory approvals
as are required by law, this Agreement and the Merger Agreements
are legal, valid and binding obligations of the members of
Holding's consolidated group that are parties thereto,
respectively, and are enforceable against such members in
accordance with the respective terms of such instruments, except
that enforcement may be limited by bankruptcy, reorganization,
insolvency and other similar laws and court decisions relating to
or affecting the enforcement of creditors' rights generally and
by general equitable principles. With respect to each member of
Holding's consolidated group, neither the execution, delivery or
performance of this Agreement or the Merger Agreements, nor the
consummation of the transactions contemplated hereby or thereby
will (i) violate, conflict with, or result in a breach of any
provisions of, (ii) constitute a default (or event that, with
notice or lapse of time or both, would constitute a default)
under, (iii) result in the termination of or accelerate the
performance required by, or (iv) result in the creation of any
lien, security interest, charge or encumbrance upon any of its
properties or assets under, any of the terms, conditions or
provisions of its articles of incorporation or by-laws or any
material note, bond, mortgage, indenture, deed of trust, lease,
license, agreement or other instrument or obligation to or by
which it or any of its assets is bound; or violate any order,
writ, injunction, decree, statute, rule or regulation of any
governmental body applicable to it or any of its assets.
3.04 Financial Statements, Reports and Proxy Statements.
Holding has delivered to FCC true and complete copies of (a) the
consolidated balance sheets as of December 31, 1992 and 1993 of
Holding and its consolidated subsidiaries, the related
consolidated statements of income, shareholders' equity and cash
flows for the respective years then ended, the related notes
thereto, and the report of its independent public accountants
with respect thereto (collectively, the "Financial Statements"),
(b) the unaudited consolidated balance sheet as of September 30,
1994 and September 30, 1993 of Holding and its consolidated
subsidiaries, and the related unaudited statements of income,
shareholders' equity and cash flows for the nine-month periods
then ended (collectively, the "Interim Financial Statements"),
(c) the annual report to the Board of Governors of the Federal
Reserve System ("Federal Reserve Board") for the year ended
December 31, 1993, of each member of Holding's consolidated group
required to file such reports, (d) all call reports, including
all amendments thereto, made to the OCC or the Federal Deposit
Insurance Corporation ("FDIC") or the Federal Reserve Board, as
the case may be, since December 31, 1991, of each member of
Holding's consolidated group required to file such reports, (e)
Holding's Annual Report to Shareholders for 1993 and all
subsequent Quarterly Reports to Shareholders, (f) all reports
filed since December 31, 1991 pursuant to Section 15(d) of the
Securities Act of 1933, as amended (the "Securities Act"), or
Section 13 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), of each member of Holding's consolidated
group required to file such reports, and (g) all Proxy Statements
disseminated to Holding's shareholders or the shareholders of any
of its subsidiaries at any time since December 31, 1991. The
Financial Statements and the Interim Financial Statements have
been, and all financial statements delivered by Holding to FCC or
FNBLC as required by clause (b) of Section 5.08 will be, prepared
in conformity with generally accepted accounting principles
applied on a basis consistent with prior periods, and the
Financial Statements and the Interim Financial Statements
present, and all financial statements delivered by Holding to FCC
or FNBLC as required by clause (b) of Section 5.08 will present,
fairly, in conformity with generally accepted accounting
principles, the consolidated results of operations of Holding's
consolidated group for the respective periods covered thereby and
the consolidated financial condition of its consolidated group as
of the respective dates thereof. All reports referred to above
have been, and all subsequent reports through the Effective Time
will be, filed on the appropriate form and prepared in accordance
with such form's instructions and the applicable rules and
regulations of the regulating federal agency. No member of
Holding's consolidated group has, nor are any of any such
member's assets subject to, any material liability, commitment,
indebtedness or obligation (of any kind whatsoever, whether
absolute, accrued, contingent, known, unknown, matured or
unmatured) which is not reflected and adequately reserved against
in the latest balance sheet forming part of the Interim Financial
Statements (the "Latest Balance Sheet") other than such expenses
as are included in the Deductible Amount under the Holding
Company Merger Agreement and those that are listed on
Schedule 3.04 to this Agreement, for which no reserve was
included in the Latest Balance Sheet. The Financial Statements
and Interim Financial Statements are supported by and consistent
with detailed trial balances of investment securities, loans and
commitments, depositors' accounts and cash balances on deposit
with other institutions, copies of which have been made available
to FCC.
3.05 Loan and Investment Portfolios. All loans, discounts
and financing leases (in which a member of Holding's consolidated
group is lessor) reflected on the Latest Balance Sheet (a) were,
at the time and under the circumstances in which made, made for
good, valuable and adequate consideration in the ordinary course
of business of its consolidated group, (b) are evidenced by
genuine notes, agreements or other evidences of indebtedness and
(c) to the extent secured, have been secured by valid liens and
security interests which have been perfected. Accurate lists of
all such loans, discounts and financing leases as of the date of
the Latest Balance Sheet, and of the investment portfolios of
each member of Holding's consolidated group as of such date, have
been delivered to FCC.
3.06 Adequacy of Allowances for Losses . Each of the
allowances for losses on loans, financing leases and other real
estate shown on the Latest Balance Sheet is adequate in
accordance with applicable regulatory guidelines and generally
accepted accounting principles in all material respects, and
there are, through the date of this Agreement, no facts or
circumstances known to any executive officer of Holding or Bank
which are likely to require in accordance with applicable
regulatory guidelines or generally accepted accounting principles
a future material increase in any such provisions for losses.
Each of the allowances for losses on loans, financing leases and
other real estate reflected on the books of Holding's
consolidated group at all times from and after the date of the
Latest Balance Sheet through the date of this Agreement has been
and is adequate in accordance with applicable regulatory
guidelines and generally accepted accounting principles in all
material respects.
3.07 Examination Reports. To the extent permitted by
applicable law, Holding has provided to FCC true and correct
copies of all examination reports with respect to each member of
Holding's consolidated group made by any federal or state bank or
bank holding company regulatory authority since December 31,
1991.
3.08 Absence of Certain Changes or Events. Since the date
of the Latest Balance Sheet, there has been no event or condition
of any character (whether actual, threatened or contemplated)
that has had, or can reasonably be anticipated to have, a
material adverse effect on the financial condition, results of
operations, business or prospects of any member of Holding's
consolidated group, other than (i) those events the related
expenses of which are included in the Deductible Amount under the
Holding Company Merger Agreement or are listed in Schedule 3.04,
and (ii) events occurring after the date of this Agreement of the
character described in clauses (B), (C), (D), (E) and (F) of
subsection 6.02(b). No such member has, since the date of the
Latest Balance Sheet:
(a) with respect to Holding, borrowed any money or, except
in the ordinary course of business consistent with past
practices, (i) with respect to the Bank, borrowed any money, (ii)
loaned any money or pledged any of its credit in connection with
any aspect of its business, (iii) mortgaged or otherwise
subjected to any lien, encumbrance or other liability any of its
assets, (iv) sold, assigned or transferred any of its assets, or
(v) incurred any material liability, commitment, indebtedness or
obligation (of any kind whatsoever, whether accrued, contingent,
known, unknown, matured or unmatured);
(b) suffered any material damage, destruction or loss,
whether or not covered by insurance;
(c) [omitted]
(d) received notice or had knowledge or reason to believe
through the date of this Agreement that any material labor unrest
exists among any of its employees or that any group, organization
or union has attempted to organize any of its employees;
(e) received notice or had knowledge or reason to believe
through the date of this Agreement that any of its substantial
customers has terminated or intends to terminate such customer's
relationship with it; provided that this representation shall not
apply to any customer with respect to whom Holding (i) has given
notice to FCC of such customer's intent to terminate its
relationship, (ii) has given FCC an opportunity to contact such
customer to solicit the continuation of such relationship and
(iii) can demonstrate such customer terminated or intends to
terminate such relationship primarily as a result of the pending
consummation of the Mergers;
(f) failed to use its best efforts to operate its business
in the ordinary course consistent with past practices, or failed
to use its best efforts to preserve its business organization
intact or to use its best efforts to preserve the goodwill of its
customers and others with whom it has business relations;
(g) incurred any material loss except for losses adequately
reserved for on the Latest Balance Sheet, losses incurred after
the date of this Agreement of the character described in clauses
(B), (C), (D), (E) and (F) of Subsection 6.02(b), and expenses
associated with this transaction that (i) are listed on
Schedule 3.04 to this Agreement or (ii) are included in the
Deductible Amount under the Holding Company Merger Agreement; or
waived any material right in connection with any aspect of its
business, whether or not in the ordinary course of business;
(h) cancelled any debt owed to it, or cancelled any of its
claims, or paid any of its noncurrent obligations or liabilities,
other than debts, claims or obligations not exceeding in the
aggregate $25,000;
(i) made any capital expenditure or capital addition or
betterment, other than improvements which had already been
approved by its management or its Board of Directors prior to
February 28, 1994 or were in process at that time, and, in both
cases, listed on the Schedule of Exceptions, or any new or
additional projects in excess of $25,000 which have received
prior approval of the Chief Executive Officer of FCC or his
designee;
(j) entered into any agreement requiring the payment,
conditionally or otherwise, of any salary, bonus, extra
compensation, pension or severance payment to any of its present
or former directors, officers or employees, except for (i) such
agreements dated October 31, 1994 with Andrew J. Betz, Deanna
Beasley, and Joseph W. Roberts, Jr., (ii) such agreement dated
October 31, 1994 with Tom A. Flanagan, Jr., and (iii) the
benefits described in subsection 5.07(c) of this Agreement; or
increased by more than 5% the compensation (including salaries,
fees, bonuses, profit sharing, incentive, pension, retirement or
other similar payments) of any such person whose annual
compensation would, following such increase, exceed $30,000;
(k) except as required in accordance with generally
accepted accounting principles, changed any accounting practice
followed or employed in preparing the Financial Statements or
Interim Financial Statements;
(l) made any loan, given any discount or entered into any
financing lease which has not been (i) at the time and under the
circumstances in which made, made for good, valuable and adequate
consideration in the ordinary course of business, (ii) evidenced
by genuine notes, agreements or other evidences of indebtedness
and (iii) fully reserved against in any amount sufficient to
provide for all charge-offs reasonably anticipated in the
ordinary course of business after taking into account all
recoveries reasonably anticipated in the ordinary course of
business; or
(m) entered into any agreement, contract or commitment to
do any of the foregoing.
3.09 Taxes. Each member of Holding's consolidated group has
timely filed all federal, state, foreign and local income,
franchise, excise, real and personal property, employment and
other tax returns, tax information returns and reports required
to be filed, has paid all taxes, interest payments and penalties
which have become due, has made (and will make) adequate
provision for the payment of all taxes accruable for all periods
ending on or before the date of this Agreement (and the Closing
Date) to any city, parish, state, foreign country, the United
States or any other taxing authority, and is not delinquent in
the payment of any tax or governmental charge of any nature.
Neither the federal nor the state income tax returns of Holding's
consolidated group have been audited, nor is any audit,
examination or investigation pending, or to the best knowledge of
Holding or Bank, threatened, by the IRS or the applicable state
authority or agency, and no member of Holding's consolidated
group has ever granted the IRS or a state authority or agency an
extension of the time period within which any of such income tax
returns may be audited. No material unpaid tax deficiencies or
additional liabilities of any sort have been proposed by any
governmental representative, and no agreements for extension of
time for the assessment of any tax have been entered into by or
on behalf of any member of Holding's consolidated group. Each
such member has withheld from its employees (and timely paid to
the appropriate governmental entity) proper and accurate amounts
for all periods in compliance with all tax withholding provisions
of applicable federal, state, foreign and local laws (including
without limitation income, social security and employment tax
withholding for all forms of compensation).
3.10 Title to Assets. (a) On the date of the Latest Balance
Sheet, each member of Holding's consolidated group had and,
except with respect to assets disposed of for adequate
consideration in the ordinary course of business since such date,
now has, good and merchantable title to all real property and
good and merchantable title to all other properties and assets
reflected on the Latest Balance Sheet, free and clear of all
mortgages, liens, pledges, restrictions, security interests,
charges and encumbrances of any nature except for (i) mortgages
and encumbrances which secure indebtedness which is properly
reflected in the Latest Balance Sheet; (ii) liens for taxes
accrued but not yet payable; (iii) liens arising as a matter of
law in the ordinary course of business with respect to
obligations incurred after the date of the Latest Balance Sheet,
provided that the obligations secured by such liens are not
delinquent or are being contested in good faith; (iv) such
imperfections of title and encumbrances, if any, as do not
materially detract from the value or materially interfere with
the present use of any of such properties or assets or the
potential sale of any of such owned properties or assets; and (v)
capital leases and leases, if any, to third parties for fair and
adequate consideration. Each member of Holding's consolidated
group owns, or has valid leasehold interests in, all material
properties and assets used in the conduct of its business. Any
real property and other material assets held under lease by any
such member are held under valid, subsisting and enforceable
leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such
property by such member.
(b) With respect to each material lease of any real
property or a material amount of personal property to which any
member of Holding's consolidated group is a party, except for
financing leases in which a member of such consolidated group is
lessor, (i) such lease is in full force and effect in accordance
with its material terms; (ii) all rents and other monetary
amounts that have become due and payable thereunder have been
paid; (iii) there exists no material default, or event,
occurrence, condition or act, which with the giving of notice,
the lapse of time or the happening of any further event,
occurrence, condition or act would become a default under such
lease; and (iv) neither the Holding Company Merger nor the Bank
Merger will constitute a default or a cause for termination or
modification of such lease.
(c) Except in accordance with the provisions of this
Agreement, no member of Holding's consolidated group has any
legal obligation, absolute or contingent, to any other person to
sell or otherwise dispose of any substantial part of its assets;
or to sell or dispose of any of its assets except in the ordinary
course of business consistent with past practices.
3.11 Litigation, Pending Proceedings and Compliance with
Laws. (a) Except as described in the list referred to in
subparagraph (e) below, there are no material claims of any kind
or any actions, suits, proceedings, arbitrations or
investigations pending or, to the best of Holding's and Bank's
knowledge, threatened, nor does any member of Holding's
consolidated group have knowledge of a basis for any claim, in
any court or before any governmental agency or instrumentality or
arbitration panel or otherwise, against any member of Holding's
consolidated group.
(b) Each member of Holding's consolidated group has
complied with and is not in default in any material respect under
(and has not been charged or threatened with or come under
investigation with respect to any charge concerning any material
violation of any provision of) any federal, state or local law,
regulation, ordinance, rule or order (whether executive,
judicial, legislative or administrative) or any order, writ,
injunction or decree of any court, agency or instrumentality.
(c) There are no material uncured violations, or violations
with respect to which material refunds or restitution may be
required, cited in any compliance report to any member of
Holding's consolidated group as a result of examination by any
bank or bank holding company regulatory authority.
(d) No member of Holding's consolidated group is subject to
any written agreement, memorandum or order with or by any bank or
bank holding company regulatory authority.
(e) The subsection of the Schedule of Exceptions that
corresponds to this subsection lists each claim, action, suit,
proceeding, arbitration, or investigation, pending or known to be
threatened, in which any material claim or demand is made or
threatened to be made against any member of Holding's
consolidated group.
(f) Other than the matter styled Martin v. Lakeside
Bancshares, all existing disputes or litigation involving Holding
or Bank on the one hand, and any shareholder or employee of
either of them on the other hand or between Holding and any
regulatory authorities, including federal and state court
shareholder litigation, have been resolved.
3.12 Employee Benefit Plans. Holding and the Bank
currently maintain two qualified retirement plans (the "Plans")
known as Lakeside National Bank of Lake Charles Deferred Savings
Plan (the "Deferred Savings Plan") and Lakeside Bancshares, Inc.
Employee Stock Ownership Plan ("ESOP"). These plans are the only
"employee pension benefit plans," as such term is defined in
Section 3(2)(A) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), maintained by Holding or any member
of Holding's consolidated group. Those Plans, including the
related trusts, are qualified under Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), and the
related trusts are exempt from taxation under Section 501(a) of
the Code. In making the above representation with regard to the
Deferred Savings Plan, Holding and Bank are relying solely on the
determination letters received from IRS dated April 8, 1986 and
December 21, 1994 and their knowledge of the operation of the
Deferred Savings Plan. In addition, the ESOP has been submitted
to IRS for a determination letter but it has not yet been
received. No determination letter had been requested for the
ESOP prior to that time. Neither Holding nor Bank has knowledge
of any factor that would prevent a determination letter for the
ESOP from being issued.
The Plans comply in all material respects with all
applicable requirements of ERISA, the Code and all other
applicable laws and are administered in all material respects in
accordance with the express provisions of the Plans' documents,
including the trust agreements. No member of Holding's
consolidated group has any knowledge of any fact that would
materially adversely affect the qualified status of the Plans.
True and complete copies of the Plans and related trust
agreements, all amendments thereto and any relevant
communications from the IRS or the Department of Labor related to
the Plans have been delivered to FCC. No member of Holding's
consolidated group currently maintains any Benefit Plans that are
subject to regulation by the Pension Benefit Guaranty Corporation
("PBGC").
In 1985, Holding and the Bank terminated a defined benefit
plan known as the Retirement Plan for Employees of Lakeside
National Bank of Lake Charles. A Notice of Sufficiency was
received from the PBGC as a part of such termination and all of
the assets from such terminated plan have been distributed. In
addition, another defined benefit plan was terminated by the Bank
with distribution of the benefits thereunder and a Post-
Distribution Certification for Standard Terminations dated July
7, 1992 was filed with the PBGC. A Notice of Sufficiency was
received from the PBGC with respect to this plan termination. No
other "employee pension benefit plan" has been maintained in the
past by any member of Holding's consolidated group.
With respect to the Plans, no termination, whether partial
or complete, has occurred, and there has been no complete
discontinuance of contributions. Except for the Plans as defined
above, there is no profit sharing, pension, stock purchase, stock
option, bonus, retirement or similar employee pension benefit
plan covering persons employed by any member of Holding's
consolidated group. All of the Plans of Holding's consolidated
group have been fully funded to the extent funding is required,
and all necessary accruals therefor have been made on the books
of account of such consolidated group, in the manner and to the
extent required by generally accepted accounting principles.
3.13 Insurance Policies. Each member of Holding's
consolidated group maintains in force insurance policies and
bonds in such amounts and against such liabilities and hazards as
are considered by it to be adequate. An accurate list of all
such insurance policies has been delivered to FCC. No member of
Holding's consolidated group is now liable, nor will any such
member become liable, for any material retroactive premium
adjustment. All policies are valid and enforceable and in full
force and effect, and no member of Holding's consolidated group
has received any notice of a material premium increase or
cancellation with respect to any of its insurance policies or
bonds. Within the last three years, no member of Holding's
consolidated group has been refused any insurance coverage sought
or applied for, and no such member has reason to believe that its
existing insurance coverage cannot be renewed as and when the
same shall expire, upon terms and conditions as favorable as
those presently in effect.
3.14 Agreements. No member of Holding's consolidated group
is a party to:
(a) any collective bargaining agreement;
(b) except as set forth on Schedule 3.14, any employment or
other agreement or contract with or commitment to any employee
except such agreements as are terminable without penalty upon not
more than five days notice by the employer;
(c) except as entered into in the ordinary course of
business consistent with past practices with respect to
customers, any obligation of guaranty or indemnification, letters
of credit, guaranties of endorsements and guaranties of
signatures;
(d) any agreement, contract or commitment which is or if
performed may be materially adverse to the financial condition,
results of operations, business or prospects of any member of
Holding's consolidated group; or
(e) any agreement, contract or commitment containing any
covenant limiting the freedom of any member of Holding's
consolidated group to engage in any line of business permitted by
regulatory authorities or to compete with any person.
The subsection of the Schedule of Exceptions that
corresponds to this subsection contains a list of each material
agreement, contract or commitment (except those entered into in
the ordinary course of business with respect to loans, lines of
credit, letters of credit, depositor agreements, certificates of
deposit and similar banking activities) to which any member of
Holding's consolidated group is a party or which affects any such
member. No member of Holding's consolidated group has in any
material respect breached, nor is there any pending or to its
knowledge threatened claims that it has materially breached, any
of the terms or conditions of any of its agreements, contracts or
commitments.
3.15 Licenses, Franchises and Governmental Authorizations.
Each member of Holding's consolidated group possesses all
licenses, franchises, permits and other governmental
authorizations necessary for the continued conduct of its
business without interference or interruption. The deposits of
each such member are insured by the FDIC to the extent provided
by applicable law, and there are no pending or to the best of
Holding's and Bank's knowledge threatened proceedings to revoke
or modify that insurance or for relief under 12 U.S.C. Section
1818.
3.16 Corporate Documents. Holding has delivered to FCC,
with respect to each member of Holding's consolidated group, true
and correct copies of its articles of incorporation or articles
of association, and its by-laws, all as amended. All of the
foregoing and all of the corporate minutes and stock transfer
records of each member of Holding's consolidated group are
current, complete and correct in all material respects.
3.17 Certain Transactions. Except as disclosed by Holding
in any report filed with the Securities and Exchange Commission
(the "SEC") and delivered to FCC prior to the date of this
Agreement, no past or present director, executive officer or five
percent shareholder of any member of Holding's consolidated group
has, since January 1, 1991, engaged in any transaction or series
of transactions which, if such member had been subject to Section
14(a) of the Exchange Act at all times since that date, would be
required to be disclosed in its proxy materials pursuant to Item
404 of Regulation S-K of the Rules and Regulations of the SEC.
3.18 Brokers' or Finders' Fees. No agent, broker,
investment banker, investment or financial advisor or other
person acting on behalf of any member of Holding's consolidated
group is entitled to any commission, broker's or finder's fee
from any of the parties hereto in connection with any of the
transactions contemplated by this Agreement, except for Chaffe &
Associates, Inc. and Southard Financial, who were retained
pursuant to written agreements previously delivered to FCC and
FNBLC.
3.19 Environmental Matters.
(a) (i) Holding and each member of Holding's consolidated
group have obtained all material permits, licenses and other
authorizations that are required to be obtained by it under any
applicable Environmental Law Requirements (as hereinafter
defined) in connection with the operation of its businesses and
ownership of its properties (collectively, the "Subject
Properties"), including without limitation properties acquired by
foreclosure or in settlement of loans;
(ii) Holding and each member of its consolidated group
are in compliance in all material respects with all terms and
conditions of such permits, licenses and authorizations and with
all applicable Environmental Law Requirements;
(iii)There are no past or present events, conditions,
circumstances, activities or plans by any member of Holding's
consolidated group related in any manner to Holding or any member
of its consolidated group or the Subject Properties that did or
would, in any material respect, violate or prevent compliance or
continued compliance with any of the Environmental Law
Requirements, or give rise to any Environmental Liability, as
hereinafter defined;
(iv) There is no civil, criminal or administrative
action, suit, demand, claim, order, judgment, hearing, notice or
demand letter, notice of violation, investigation or proceeding
pending or, to the knowledge of any executive officer of any
member of Holding's consolidated group, threatened by any person
against Holding or any member of its consolidated group, or any
prior owner of any of the Subject Properties and relating to the
Subject Properties, and relating in any way to any Environmental
Law Requirement or seeking to impose any Environmental Liability;
and
(v) No member of Holding's consolidated group is
subject to or responsible for any material Environmental
Liability that is not set forth and adequately reserved against
on the Latest Balance Sheet.
(b) "Environmental Law Requirement" means, for purposes of
this Agreement, all applicable present and future statutes,
regulations, rules, ordinances, codes, licenses, permits, orders,
approvals, plans, authorizations, concessions, franchises, and
similar items, of all governmental agencies, departments,
commissions, boards, bureaus, or instrumentalities of the United
States, states and political subdivisions thereof and all
applicable judicial, administrative, and regulatory decrees,
judgments and orders relating to the protection of human health
or the environment, including without limitation: (A) all
requirements, including but not limited to those (i) pertaining
to reporting, licensing, permitting, investigation, and
remediation of emissions, discharges, releases, or threatened
releases of Hazardous Materials (as such term is defined below),
chemical substances, pollutants, contaminants, or hazardous or
toxic substances, materials or wastes whether solid, liquid, or
gaseous in nature, into the air, surface water, groundwater, or
land, or (ii) relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or
handling of Hazardous Materials, chemical substances, pollutants,
contaminants, or hazardous or toxic substances, materials or
wastes, whether solid, liquid, or gaseous in nature; (B) all
requirements pertaining to protection of the health and safety of
employees or the public; and (C) all requirements pertaining to
the (i) drilling, production, and abandonment of oil and gas
wells, (ii) the transportation of produced oil and gas, and (iii)
the remediation of sights related to that drilling, production or
transportation.
(c) "Hazardous Materials" shall mean: (A) Any "hazardous
substance" as defined by either the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 USC Section
9601, et seq.) ("CERCLA") as amended from time to time, or
regulations promulgated thereunder; (B) asbestos; (C)
polychlorinated biphenyls; (D) any "regulated substance" as
defined by 40 C.F.R. Section 280.12, or La. Admin. Code 33:XI.103;
(E) any naturally occurring radioactive material ("NORM"), as
defined by La. Admin. Code 33:XV, Chapter 14, as amended from
time to time, irrespective of whether the NORM is located
in Louisiana or another jurisdiction; (F) any non-hazardous
oilfield wastes ("NOW") defined under La. R.S. 30:1, et seq.,
and regulations promulgated thereunder, irrespective of whether
those wastes are located in Louisiana or another jurisdiction;
(G) any substance the presence of which on the Subject Properties
is prohibited by any lawful rules and regulations of legally
constituted authorities from time to time in force and effect
relating to the Subject Properties; and (H) any other substance
which by any such rule or regulation requires special handling
in its collection, storage, treatment or disposal.
(d) "Environmental Liability" shall mean, for purposes of
this Agreement, (i) any liability or obligation (of any kind
whatsoever, whether absolute or contingent, accrued or unaccrued,
known or unknown) arising under any Environmental Law
Requirement, or (ii) any liability or obligation (of any kind
whatsoever, whether absolute or contingent, accrued or unaccrued,
known or unknown) under any other theory of law or equity
(including without limitation any liability for personal injury,
property damage or remediation) that results from, or is based
upon or related to, the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling, or the
emission, discharge, release or threatened release into the
environment, of any Hazardous Materials, pollutant, contaminant,
chemical, or industrial, toxic or hazardous substance or waste.
3.20 Community Reinvestment Act. Bank has complied in all
material respects with the provisions of the Community
Reinvestment Act ("CRA") and the rules and regulations
thereunder, has a CRA rating of not less than "satisfactory", and
has received no material criticism from regulators with respect
to discriminatory lending practices.
3.21 Severance Benefits. The Board of Directors of Holding
and Bank adopted on July 14, 1994, a severance benefit plan,
covering employees of Holding or Bank with the exception of three
officers of Bank who have employment contracts and Tom A.
Flanagan, Jr., heretofore agreed upon by the parties, and such
plan, as adopted, is the only plan pursuant to which employees of
Holding or Bank may be provided with severance benefits, other
than the existing employment contracts with such three officers
and the severance arrangements with Tom A. Flanagan, Jr., which
are described in the Schedule of Exceptions.
3.22 Accuracy of Statements. No warranty or representation
made or to be made by any member of Holding's consolidated group
in this Agreement or in any document furnished or to be furnished
by any member of Holding's consolidated group pursuant to this
Agreement, and no information furnished by any such member
pursuant to this Agreement, contains or will contain, as of the
date of this Agreement, the effective date of the Registration
Statement (as defined in subsection 5.14 hereof) and/or the
Closing Date, an untrue statement of a material fact or an
omission of a material fact necessary to make the statements
contained herein and therein, in light of the circumstances in
which they are made, not misleading.
3.23 Certain Actions. No member of Holding's consolidated
group has, since the date of the Latest Balance Sheet, taken any
action of the type described in clause (a), (b), (d), (e), (g),
(h), (i), (j), (k), (l) and/or (m) of Section 5.07.
SECTION 4
Representations and Warranties
of FCC and FNBLC
FCC and FNBLC represent and warrant to Holding and Bank
that:
4.01 Organization and Qualification. FCC is a corporation
duly organized and validly existing under the laws of the State
of Louisiana and is a bank holding company within the meaning of
the Bank Holding Company Act. FNBLC is a national banking
association duly organized and validly existing under the laws of
the United States. Each of FCC and FNBLC has all requisite
corporate power and authority to own and lease its property and
to carry on its business as it is currently being conducted and
is qualified and in good standing as a foreign corporation in all
jurisdictions in which the failure to so qualify would have a
material adverse effect on its financial condition, results of
operations, business or prospects.
4.02 Capital Stock; Other Interests. The authorized capital
stock of FCC consisted at December 31, 1994 of 100,000,000 shares
of common stock, $5.00 par value per share, of which at such date
26,192,514 shares were issued and outstanding and no shares were
held in its treasury; and 5,000,000 shares of preferred stock, no
par value, of which at such date 2,398,170 shares were issued and
outstanding and no shares were held in its treasury. All issued
and outstanding shares of capital stock of FCC have been duly
authorized and are validly issued, fully paid and non-assessable.
FCC owns all of the issued and outstanding shares of capital
stock of FNBLC.
4.03 Corporate Authorization; No Conflicts. Subject to the
approval of this Agreement and the Bank Merger Agreement by FCC
as sole shareholder of FNBLC, all corporate acts and other
proceedings required of FCC and FNBLC for the due and valid
authorization, execution, delivery and performance of this
Agreement and the Merger Agreements and consummation of the
Mergers have been validly and appropriately taken. Subject to
such shareholder approval and to such regulatory approvals as are
required by law, this Agreement and the Merger Agreements are
legal, valid and binding obligations of FCC and FNBLC, as the
case may be, and are enforceable against them in accordance with
the respective terms of such instruments, except that enforcement
may be limited by bankruptcy, reorganization, insolvency and
other similar laws and court decisions relating to or affecting
the enforcement of creditors' rights generally and by general
equitable principles. With respect to each of FCC and FNBLC,
neither the execution, delivery or performance of this Agreement
or the Merger Agreements, nor the consummation of the
transactions contemplated hereby or thereby will (i) violate,
conflict with, or result in a breach of any provision of, (ii)
constitute a default (or an event that, with notice or lapse of
time or both, would constitute a default) under, (iii) result in
the termination of or accelerate the performance required by, or
(iv) result in the creation of any lien, security interest,
charge or encumbrance upon any of its properties or assets under,
any of the terms, conditions or provisions of its articles of
incorporation or by-laws or any material note, bond, mortgage,
indenture, deed of trust, lease, license, agreement or other
instrument or obligation to or by which it or any of its assets
is bound; or violate any order, writ, injunction, decree,
statute, rule or regulation of any governmental body applicable
to it or any of its assets.
4.04 FCC Corporate Documents. FCC and FNBLC have delivered
to Holding true and correct copies of their articles of
incorporation or association, as amended, and by-laws, as
amended.
4.05 Reports of FCC. FCC has delivered to Holding true and
complete copies of (i) its Quarterly Reports to the SEC on Form
10-Q for the quarters ended September 30, 1994 and September 30,
1993; (ii) its Annual Reports to the SEC on Form 10-K for the
years ended December 31, 1993 and 1992; (iii) its 1994 Proxy
Statement; (iv) any reports disseminated to its shareholders
since January 1, 1993; and (v) any other report made by it to the
SEC since December 31, 1992. None of the information furnished
or to be furnished by FCC or FNBLC pursuant to this Agreement
contains or will contain, when taken as a whole, an untrue
statement of a material fact or an omission of a material fact
necessary to make the statements made, in the light of the
circumstances in which they are made, not misleading.
4.06 Material Developments. Since September 30, 1994, there
has not been:
(a) any material change in the business, financial
condition or results of operations of FCC, other than changes in
the ordinary course of business which have not had, and may
reasonably be expected not to have, a material adverse effect on
its financial condition, results of operations, business or
prospects;
(b) any event or circumstance that is likely to require a
future material increase or decrease as a result of charge-offs
in the allowance for loan losses reflected on FCC's balance sheet
as of September 30, 1994;
(c) any material claim of any kind or any material actions,
suits, proceedings, arbitrations or investigations pending or
threatened in any court or before any governmental agency or
instrumentality or arbitration panel or otherwise against, by or
affecting FCC or any member of its consolidated group or the
business, prospects, condition (financial or otherwise) or assets
of any such entity; or
(d) to FCC's knowledge, any past or present events,
conditions, circumstances, activities or plans related in any
manner to any member of FCC's consolidated group or any of FCC's
properties that, in any material respect, violate or prevent
compliance or continued compliance with any Environmental Law
Requirement or give rise to any Environmental Liability,
in each such case that (i) are of a type that would be required
to be disclosed by FCC in a registration statement or report
filed with the SEC in order that such registration statement or
report not contain a misstatement of material fact or omit to
state a material fact; (ii) have not been or shall not have been
publicly disclosed prior to the commencement of the 20 trading
day period over which the market value of a share of FCC Common
Stock will be calculated pursuant to Section 4.1 of the Holding
Company Merger Agreement; and (iii) which if publicly disclosed
would be reasonably likely to result in a material decrease in
such market value of FCC Common Stock.
4.07 Legality of FCC Securities. All shares of FCC Common
Stock (as such term is defined in the Holding Company Merger
Agreement) to be issued pursuant to the Holding Company Merger
have been duly authorized and, when issued pursuant to the
Holding Company Merger Agreement, will be validly issued, fully
paid and non-assessable.
4.08 Brokers' or Finders' Fees. No agent, broker,
investment banker, investment or financial advisor or other
person acting on behalf of FCC or FNBLC is entitled to any
commission, broker's or finder's fee from any of the parties
hereto in connection with any of the transactions contemplated by
this Agreement.
SECTION 5
Covenants and Conduct of Parties
Prior to the Effective Date
The parties covenant and agree as follows:
5.01 Investigations; Planning. Each member of Holding's
consolidated group shall continue to provide to FCC and FNBLC and
to their authorized representatives full access during all
reasonable times to its premises, properties, books and records
(including, without limitation, all corporate minutes and stock
transfer records, provided that all references to the pricing of
the transactions contemplated hereby and to the analysis of
Chaffe & Associates, Inc. of the bids received by Holding shall
be removed from all minutes of the special committee of the Board
of Directors before delivery to FCC and FNBLC), and to furnish
FCC and FNBLC and such representatives with such financial and
operating data and other information of any kind respecting its
business and properties as FCC and FNBLC shall from time to time
reasonably request, except as restricted by applicable law. Any
investigation shall be conducted in a manner which does not
unreasonably interfere with the operation of the business of
Holding's consolidated group. Each member of Holding's
consolidated group agrees to cooperate with FCC and FNBLC in
connection with planning for the efficient and orderly
combination of the parties and the operation of FCC and FNBLC
after consummation of the Mergers, including the transfer
subsequent to shareholder approval of the transactions
contemplated hereby, and subject to Section 5.13, of employees to
open positions at FNBLC. In the event of termination of this
Agreement prior to the Effective Date, FCC and FNBLC shall
return, without retaining copies thereof, all confidential or
non-public documents, work papers and other materials obtained
from Holding's consolidated group in connection with the
transactions contemplated hereby and, until February 18, 1997,
shall keep such information confidential, not disclose such
information to any other person or entity except as may be
required by law, and not use such information in connection with
its business, and shall use its best efforts to cause all of its
employees, agents and representatives to keep such information
confidential and not to disclose such information or use it in
connection with its business, in each case unless and until such
information shall come into the public domain through no fault of
FCC or FNBLC.
5.02 Cooperation and Best Efforts. Each of the parties will
cooperate with the other parties and use its reasonable best
efforts to (a) procure all necessary consents and approvals, (b)
complete all necessary filings, registrations and certificates,
(c) satisfy all requirements prescribed by law for, and all
conditions set forth in this Agreement to, the consummation of
the Mergers and the transactions contemplated hereby and by the
Merger Agreements, and (d) effect the transactions contemplated
by this Agreement and the Merger Agreements at the earliest
practicable date. Without limiting the generality of the
foregoing, FCC will use its reasonable best efforts to comply, as
provided in Section 5.22, with any divestiture that may be
imposed by regulatory authorities as a condition to regulatory
approval of the Mergers by reason of antitrust concerns;
otherwise, FCC shall not be required to satisfy any condition to
regulatory approval other than usual and customary conditions
required in such transactions generally. Holding and Bank agree
to cooperate fully with respect to any such divestiture, but
shall not be required to consummate (or agree to consummate) any
divestiture other than immediately prior to, or simultaneously
with or following, the Closing under this Agreement.
5.03 Information for, and Preparation of, Proxy Statement.
Each of the parties will cooperate in the preparation of the
Registration Statement referred to in subsection 5.14 and a proxy
statement of Holding (the "Proxy Statement") which complies with
the requirements of the Securities Act, the rules and regulations
promulgated thereunder and other applicable federal and state
laws, for the purpose of submitting this Agreement, the Holding
Company Merger Agreement and the transactions contemplated hereby
and thereby to Holding's shareholders for approval. Each of the
parties will as promptly as practicable after the date hereof
furnish all such data and information relating to it and its
subsidiaries as any of the other parties may reasonably request
for the purpose of including such data and information in the
Proxy Statement and the Registration Statement.
5.04 Approval of Bank Merger Agreement. FCC, as the sole
shareholder of FNBLC, and Holding, as the sole shareholder of
Bank, shall take all action necessary to effect shareholder
approval of the Bank Merger Agreement.
5.05 Press Releases. FCC and Holding will cooperate with
each other in the preparation of any press releases announcing
the execution of this Agreement or the consummation of the
transactions contemplated hereby or any transactions related
thereto. Without the prior written consent of the chief
executive officer of the other party, no member of Holding's or
FCC's consolidated group will issue any press release or other
written statement for general circulation relating to the
transactions contemplated hereby, except as may otherwise be
required by law and, if practical, prior notice of such release
is provided to the other parties.
5.06 Preservation of Business. Each member of Holding's
consolidated group will use its best efforts to preserve the
possession and control of all of its assets other than those
consumed or disposed of for value in the ordinary course of
business, to preserve the goodwill of customers and others having
business relations with it and to do nothing knowingly to impair
its ability to keep and preserve its business as it exists on the
date of this Agreement.
5.07 Conduct of Business in the Ordinary Course. Each
member of Holding's consolidated group shall conduct its business
only in the ordinary course consistent with past practices and,
except as otherwise provided herein, it shall not, without the
prior written consent of the chief executive officer of FCC or
his duly authorized designee:
(a) declare, set aside, increase or pay any dividend, other
than Holding's regular semi-annual dividends, which shall not be
more than $0.55 per share, paid at the times consistent with past
practices (except that the record and payable dates for the next
such dividend, and for the third quarter dividend of FCC, in the
event such dividends are declared, shall be June 16, 1995 (record
date) and July 3, 1995 (payable date), and if the Effective Date
is on or before such record date then holders of Holding Common
Stock shall, subject to the provisions of the Holding Company
Merger Agreement, be entitled to the FCC dividend (if declared)
rather than the Holding dividend, it being the intention that
such holders would receive at least one, but not both, of such
dividends if the one to which they would be entitled is declared
(which shall be and remain within the sole discretion of the
respective boards of directors); or declare or make any
distribution on, or directly or indirectly combine, redeem,
reclassify, purchase, or otherwise acquire, any shares of its
capital stock or authorize the creation or issuance of or issue
any additional shares of its capital stock or any securities or
obligations convertible into or exchangeable for its capital
stock, provided that this subparagraph shall not apply to prevent
dividends or distributions from any member of Holding's
consolidated group to any other member of such consolidated
group;
(b) amend its articles of incorporation or association or
by-laws or adopt or amend any resolution or agreement concerning
indemnification of its directors or officers;
(c) enter into or modify any agreement so as to require the
payment, conditionally or otherwise, of any salary, bonus, extra
compensation, pension or severance payment to any of its present
or former directors, officers or employees or increase the
compensation (including salaries, fees, bonuses, profit sharing,
incentive, pension, retirement or other similar benefits and
payment) of any such person; provided that, notwithstanding the
foregoing, (i) Bank may accrue at a rate of up to $12,500 per
month from January 1, 1995, through the Effective Date for the
payment, in a manner consistent with past practices in accordance
with its bonus plan which has been provided to FCC and in amounts
consistent with the amounts paid in prior years, of employee
bonuses to (A) persons employed by Bank in connection with
operations which are divested by it pursuant to Section 5.02 who
remain employed by Bank through but not after the time of such
divestiture and either (x) are not offered employment by the
purchaser or (y) become employed by the purchaser and remain
employed by such purchaser at the effective time of the Bank
Merger, and (B) other persons (including, without limitation, the
three contract employees of Bank) who are employees of Bank at
the effective time of the Bank Merger and do not voluntarily
leave the employ of the Receiving Association (as such term is
used in the Bank Merger Agreement) prior to the earlier of
(X) the date that is 45 days after the effective time of the Bank
Merger, or (Y) the date on which the conversion of the computer
systems of Bank to the systems of the Receiving Association has
been completed (but not before the effective time of the Bank
Merger), it being agreed that Bank's board of directors will,
prior to the Closing, determine the identities of prospective
recipients of such bonuses and the amounts to be paid to each
(which shall be in a manner consistent with past practices in
accordance with its bonus plan and in amounts consistent with the
amounts paid in prior years, but prorated to reflect the amount
of time from January 1, 1995, through the effective date of the
Bank Merger; and such bonuses shall not exceed, in the aggregate,
the amount accrued for such purpose as permitted by this clause
(i)) and that FNBLC will, after the Closing, pay such bonuses in
such amounts to those prospective recipients who meet the
foregoing employment conditions therefor, promptly after such
conditions have been met; (ii) Holding or Bank may make payments
pursuant to the severance plan provided in Section 3.21;
(iii) Bank may honor the employment contracts as amended on
October 31, 1994 with Andrew J. Betz, Deanna Beasley and Joseph
W. Roberts, Jr., and the employment contract dated October 31,
1994 with Tom A. Flanagan, Jr.; and (iv) Bank may commit to make
contributions to its employee stock ownership plan at the rate of
up to $16,666 per month on the last day of each month, commencing
January 31, 1995, and otherwise consistent with past practices;
(d) except in the ordinary course of business consistent
with past practices, place or suffer to exist on any of its
assets or properties any material mortgage, pledge, lien, charge
or other encumbrance, except those of the character described in
subsection 3.10 hereof, or cancel any material indebtedness owing
to it or any claims which it may have possessed, or waive any
right of substantial value or discharge or satisfy any material
noncurrent liability other than debts, claims, rights or
liabilities not exceeding in the aggregate $25,000;
(e) merge or consolidate with another entity, or sell or
otherwise dispose of a material part of its assets or, except in
the ordinary course of business consistent with past practices,
sell any of its assets;
(f) commit or omit to do any act which act or omission
would cause a material breach of any covenant of Holding or Bank
contained in this Agreement or would cause any representation or
warranty of Holding or Bank contained in this Agreement to become
untrue in any material respect, as if each such representation
and warranty were continuously made from and after the date
hereof;
(g) violate in any material respect any law, statute, rule,
governmental regulation or order;
(h) fail to maintain its books, accounts and records in the
usual manner on a basis consistent with that heretofore employed;
(i) fail to pay, or to make adequate provision for the
payment of, all taxes, interest payments and penalties due and
payable (and/or accruable for all periods up to the Effective
Date, including that portion of its fiscal year to and including
the Effective Date) to any city, parish, state, foreign country,
the United States or any other taxing authority, except those
being contested in good faith by appropriate proceedings and for
which sufficient reserves have been established;
(j) dispose of investment securities having an aggregate
market value greater than 2% of the aggregate book value of its
investment securities portfolio on the date of the Latest Balance
Sheet or make investments in non-investment grade securities or
which are inconsistent with past investment practices;
(k) enter into any new line of business;
(l) (i) charge off (except as may otherwise be required by
law or by regulatory authorities or by generally accepted
accounting principles consistently applied) or sell (except for a
price not less than the book value thereof) any of its portfolio
of loans, discounts or financing leases; (ii) except as set forth
on Schedule 5.07, sell any asset held as other real estate or
other foreclosed assets for an amount less than 100% of its book
value at the date of the Latest Balance Sheet; or (iii) except as
set forth on such Schedule, sell any asset held as other real
estate or other foreclosed assets that had a book value at the
date of the Latest Balance Sheet in excess of $25,000; or
(m) make any extension of credit which, when added to all
other extensions of credit to the borrower and its affiliates,
would exceed $500,000 or, unless reasonable prior notice is
provided the chief executive officer of FCC or his authorized
designee, commit or otherwise become obligated to make any such
extension of credit in excess of $250,000.
5.08 Additional Information from Holding. Holding will
provide FCC and FNBLC (a) with prompt written notice of any
material adverse change in the financial condition, results of
operations, business or prospects of any member of its
consolidated group, (b) as soon as they become available, copies
of any financial statements, reports and other documents of the
type referred to in subsections 3.04 and 3.07 with respect to
each member of its consolidated group, and (c) promptly upon its
dissemination, any report disseminated to shareholders of
Holding.
5.09 Holding Shareholder Approval. Holding's Board of
Directors shall submit this Agreement and the Holding Company
Merger Agreement to its shareholders for approval in accordance
with the BCL, together with its recommendation that such approval
be given, at a special meeting of shareholders duly called and
convened for that purpose as soon as practicable.
5.10 Restricted FCC Common Stock. Holding will use its best
efforts (or, with respect to Malcolm Martin, reasonable efforts)
to obtain by the Closing Date an agreement from each person who
beneficially owns, within the meaning of Rule 13d-3 under the
Exchange Act, 10% or more of the capital stock of Holding or is a
director or executive officer who will receive shares of FCC
Common Stock by virtue of the Holding Company Merger to the
effect that such person will not dispose of any FCC Common Stock
received pursuant to the Holding Company Merger in violation of
the Securities Act or the rules and regulations of the SEC
thereunder.
5.11 Loan Policy. No member of Holding's consolidated group
will make any loans, or enter into any commitments to make loans,
which vary in any material respect from its written loan
policies, a true and correct copy of which loan policies has been
provided to FCC, provided that this covenant shall not prohibit
Bank from extending or renewing credit or loans in connection
with the workout or renegotiation of loans currently in its loan
portfolio.
5.12 No Solicitations. Prior to the Effective Time or until
the termination of this Agreement, no member of Holding's
consolidated group shall, without the prior approval of FCC,
directly or indirectly solicit, initiate or encourage inquiries
or proposals with respect to, or, except to the extent required
in the opinion of its counsel to discharge properly its fiduciary
duties to Holding's consolidated group and its shareholders,
furnish any information relating to, or participate in any
negotiations or discussions concerning, any transaction of the
type that is referred to in clauses (B) (i), (ii) and (iii) of
subparagraph (e) of subsection 7.01 of this Agreement (and in no
event will any such information be supplied except pursuant to a
confidentiality agreement that is no more favorable to the person
receiving such information than the confidentiality agreement
between Holding and FCC); and each such member shall instruct its
officers, directors, agents and affiliates to refrain from doing
any of the above, and will notify FCC immediately if any such
inquiries or proposals are received by, any such information is
requested from, or any such negotiations or discussions are
sought to be initiated with it or any of its officers, directors,
agents and affiliates; provided, however, that nothing contained
herein shall be deemed to prohibit any officer or director of
Holding or Bank from taking any action that in the written
opinion of counsel of Holding or Bank is required by law or is
required to discharge his fiduciary duties to Holding's
consolidated group and its shareholders.
5.13 Operating Functions. Each member of Holding's
consolidated group agrees to cooperate in the consolidation of
appropriate operating functions with FCC and FNBLC to be
effective on the Effective Date, provided that the foregoing
shall not be deemed to require any action that, in the opinion of
such member's Board of Directors, would adversely affect its
operations if the Mergers were not consummated.
5.14 FCC Registration Statement. FCC will prepare and file
under the Securities Act a new registration statement on Form S-4
or a post-effective amendment to its registration statement on
Form S-4 under the Prior Plan (such term is defined in
Section 9.06) (such new registration statement or such prior
registration statement, as amended by such post-effective
amendment, as the case may be, is herein called the "Registration
Statement" and will include the Proxy Statement) complying with
all the requirements of the Securities Act applicable thereto,
for the purpose, among other things, of registering the FCC
Common Stock which will be issued to the holders of Holding
Common Stock pursuant to the Holding Company Merger. FCC shall
use its best efforts to cause the Registration Statement to
become effective as soon as practicable, to qualify the FCC
Common Stock under the securities or blue sky laws of such
jurisdictions as may be required and to keep the Registration
Statement and such qualifications current and in effect for so
long as is necessary to consummate the transactions contemplated
hereby. As a result of the registration of the FCC Common Stock
pursuant to the Registration Statement, such stock shall be
freely tradeable by the shareholders of Holding except to the
extent that the transfer of any shares of FCC Common Stock
received by shareholders of Holding is subject to the provisions
of Rule 145 under the Securities Act or restricted under
applicable tax or pooling-of-interests rules.
5.15 Application to Regulatory Authorities. FCC shall
prepare (and Holding's consolidated group will cooperate in the
preparation of), as promptly as practicable, all regulatory
applications and filings which are required to be made with
respect to the Mergers.
5.16 Revenue Ruling. FCC may elect to prepare (and in that
event Holding shall cooperate in the preparation of) a request
for a ruling from the Internal Revenue Service with respect to
certain tax matters in connection with the transactions
contemplated by this Agreement and the Merger Agreements. The
election by FCC to request a ruling from the Internal Revenue
Service shall not cause an amendment to the timetable in
subsection 7.01(f) or otherwise release any party from its
obligation under Section 5.02 or extend the termination date
provided in clause (i) of subsection 7.01(c) of this Agreement.
5.17 Benefits Provided to Employees of Holding's
Consolidated Group. In addition to any benefits to be provided
in accordance with the severance benefit plan described in
subsection 3.21 hereof and the severance arrangements referred to
in clause (iii) of subsection 5.07(c), from and after the
Effective Date, FCC or FNBLC shall offer to all persons who were
employees of Holding or Bank (as reflected in the payroll records
of Holding and Bank) immediately prior to the Effective Date and
who become employees (other than temporary employees) of FNBLC
immediately following the Effective Date, the same employee
benefits (including benefits under FCC's retirement, 401(k),
flexible benefit, vacation, severance and sick leave plans or
policies) as are offered by FCC or FNBLC to employees of FNBLC,
except that there shall be no waiting period for coverage under
the First Commerce Corporation Flexible Benefit Plan or any of
its constituent plans (including the First Commerce Corporation
Medical and Dental Care Plan) and no employee who is an active
employee on the Effective Date shall be denied benefits under
such plans for a pre-existing condition. Full credit shall be
given for prior service by such employees with Holding or Bank
for eligibility vesting purposes under all of FCC's benefit plans
and policies, except that credit for prior service shall not be
given for eligibility, vesting or benefit accrual purposes under
FCC's Retirement Plan. All benefits accrued through the
Effective Date under benefit plans of Holding or Bank shall be
paid by FCC or FNBLC to the extent such benefits are not
otherwise provided to such employees through the benefit plans of
FCC or FNBLC. Except as provided in subsection 5.18, neither FCC
nor FNBLC shall be obligated to continue any employee benefit or
ERISA Plan maintained by Holding or Bank including, but not
limited to, those set forth on Section 3.12 of the Schedule of
Exceptions, nor shall they be obligated for any severance pay to
employees of Holding or Bank, regardless of whether they become
employees of FNBLC after the Mergers except as provided in the
Holding and Bank severance plan adopted on July 14, 1994, and
referenced in subsection 3.21 hereof and the employment
agreements referred to in clause (iii) of subsection 5.07(c).
5.18 ESOP and 401(k) Plans. Holding shall amend its ESOP
and 401(k) Plans to provide that all participants in such plans
who are still employed by Holding or Bank on the date of this
Agreement shall be fully vested in their accounts in such plans
as of the effective date of the Mergers. FCC shall take all
reasonable actions necessary after the Effective Date of the
Mergers to maintain the qualification and tax-exempt status of
Holding's ESOP and 401(k) Plans and to meet all other
requirements of applicable law and regulations and the provisions
of such plans, but shall make no additional contributions under
either plan, until such plans are combined with plans of FCC;
provided that if either of Holding's plans has not received a
favorable determination letter from the Internal Revenue Service,
FCC may at its option terminate such plan in lieu of combining it
with an FCC plan.
5.19 Schedule Regarding Deductible Amount. Holding will
provide to FCC, at least five days prior to the Closing Date, a
schedule showing in reasonable detail each component of the
Deductible Amount, as defined by the Holding Company Merger
Agreement.
5.20 Publication of Post-Merger Financial Statements. FCC
shall file in a timely manner all Form 10-Qs and Form 10-Ks
required to be filed by it with the SEC and will issue press
releases concerning earnings in accordance with its established
practice, until such time as FCC has reported combined earnings
for a period of at least 30 days.
5.21 Bond for Lost Certificates. Upon receipt of notice
from any of its shareholders that a certificate representing
Holding Common Stock has been lost or destroyed and prior to
issuing a new certificate, Holding shall require such shareholder
to post a bond in such amount as is sufficient to support the
shareholder's agreement to indemnify Holding against any claim
made by the owner of such certificate, unless FCC agrees to the
waiver of such bond requirement.
5.22 Divestitures. FCC and FNBLC will use their reasonable
best efforts, in which Holding and Bank will fully cooperate, to
successfully negotiate with a qualified acquiror on acceptable
terms a divestiture, substantially in accordance with the form of
Purchase and Assumption Agreement that is annexed hereto as
Exhibit 5.22 (the "P&A Agreement"), of those branches of Bank
that are identified in the P&A Agreement. If successfully
negotiated on acceptable terms, FCC, FNBLC and Bank (and, to any
extent to which its approval may be required by law or by a
qualified acquiror, Holding) will enter into the P&A Agreement
with such qualified acquiror. If other divestitures are required
in accordance with Section 5.02, FCC and FNBLC will use their
reasonable best efforts, in which Holding and Bank will fully
cooperate, to successfully negotiate an appropriate divestiture
agreement (a "Divestiture Agreement") with a qualified acquiror
on acceptable terms. If successfully negotiated on acceptable
terms, FCC, FNBLC and Bank (and, to any extent to which its
approval may be required by law or by a qualified acquiror,
Holding) will enter into such Divestiture Agreement with such
qualified acquiror.
5.23 Senior Officer. The parties agree that Bank should
hire (or lease) a senior officer to serve in an interim capacity
until the Effective Date who would report directly to the chief
executive officer of Bank and would assist Bank in, among other
things, complying with its covenants in Section 5.06 of this
Agreement. Bank and Holding have requested that FCC and FNBLC
assist in finding, or if necessary loan (or lease) to Bank, such
a person. FCC and FNBLC have consented to the foregoing, subject
to the understanding that (a) Bank's employment (or lease) of any
such person must be approved by the Boards of Directors of
Holding and Bank, (b) such person shall serve solely at the
direction of Bank's Board of Directors and senior officers,
(c) such person's compensation package must be reasonably
acceptable to FCC and FNBLC, and (d) neither Holding nor Bank
will claim that any action taken by such person was attributable
to FCC or FNBLC for any purpose of this Agreement or constitutes
a waiver or estoppel under this Agreement. The termination by
Bank of the employment (or lease) of such senior officer shall
not in and of itself constitute a breach by Bank or Holding of
any representation, warranty, or covenant of this Agreement or
serve as the basis for termination of this Agreement by FCC or
FNBLC, as long as prompt action is taken by Bank to replace the
terminated person.
5.24 Advisory Director. At the effective time of the Bank
Merger, or as soon thereafter as is practicable, FCC will cause
Tom A. Flanagan, Jr., to become an Advisory Director of FNBLC and
to continue to serve in such capacity at the pleasure of FCC and
with such privileges as may be accorded to advisory directors of
FNBLC generally.
5.25 Martin Litigation. Unless this Agreement is
terminated, FCC shall be entitled at its option to control the
conduct of the defense and any settlement of the litigation
entitled Martin vs. Lakeside Bancshares, Inc. or any litigation
based on the claims therein, and Holding and Bank shall cooperate
fully in such defense, provided that prior to the Closing any
settlement of such litigation shall be made only with the mutual
consent of FCC and Holding, which consent will not be
unreasonably withheld.
SECTION 6
Conditions of Closing
6.01 Conditions of All Parties. The obligations of each of
the parties hereto to consummate the Mergers are subject to the
satisfaction of the following conditions at or prior to the
Closing:
(a) Shareholder Approval. This Agreement and the Holding
Company Merger Agreement shall have been duly approved by the
shareholders of Holding and, if required by the BCL, by the
shareholders of FCC, and this Agreement and the Bank Merger
Agreement shall have been duly approved by the shareholders of
Bank and FNBLC.
(b) Effective Registration Statement. The Registration
Statement shall have become effective prior to the mailing of the
Proxy Statement, no stop order suspending the effectiveness of
the Registration Statement shall have been issued, and no
proceedings for that purpose shall have been instituted or, to
the knowledge of any party, shall be contemplated, and FCC shall
have received all state securities laws permits and
authorizations necessary to consummate the transactions
contemplated hereby.
(c) No Restraining Action. No action or proceeding shall
have been threatened or instituted before a court or other
governmental body to restrain or prohibit the transactions
contemplated by the Merger Agreements or this Agreement or to
obtain damages or other relief in connection with the execution
of such agreements or the consummation of the transactions
contemplated hereby or thereby; and no governmental agency shall
have given notice to any party hereto to the effect that
consummation of the transactions contemplated by the Merger
Agreements or this Agreement would constitute a violation of any
law or that it intends to commence proceedings to restrain
consummation of either of the Mergers.
(d) Statutory Requirements and Regulatory Approval. All
statutory requirements for the valid consummation of the
transactions contemplated by the Merger Agreements and this
Agreement shall have been fulfilled; all appropriate orders,
consents and approvals from all regulatory agencies and other
governmental authorities whose order, consent or approval is
required by law for the consummation of the transactions
contemplated by this Agreement and the Merger Agreements shall
have been received; and the terms of all requisite orders,
consents and approvals shall then permit the effectuation of the
Mergers without imposing any material conditions with respect
thereto except as otherwise provided in Section 5.02 of this
Agreement and except for any such conditions that are acceptable
to FCC and FNBLC.
(e) Tax Opinion. FCC and Holding shall have received the
opinion of Arthur Andersen & Co., substantially in the Form of
Exhibit C annexed hereto, as to certain tax aspects of the
Mergers, including an opinion that the receipt of FCC Common
Stock by Holding's shareholders will not be a taxable event to
such shareholders.
6.02 Additional Conditions of FCC and FNBLC. The
obligations of FCC and FNBLC to consummate the Mergers are also
subject to the satisfaction of the following additional
conditions at or prior to the Closing:
(a) Representations, Warranties and Covenants. Each of the
representations and warranties of Holding and Bank contained in
this Agreement shall be true and correct in all material respects
on the Closing Date, with the same effect as though made at such
date, except to the extent of changes permitted by the terms of
this Agreement, and each of Holding and Bank shall have in all
material respects performed all obligations and complied with all
covenants required by this Agreement and the Merger Agreements to
be performed or complied with by it at or prior to the Closing.
In addition, each of Holding and Bank shall have delivered to FCC
and FNBLC its certificate dated as of the Closing Date and signed
by its chief executive officer and chief financial officer or
other official acceptable to FCC to the effect that, except as
specified in such certificate, such persons do not know, and have
no reasonable grounds to know, of any material failure or breach
of any representation, warranty or covenant made by it in this
Agreement.
(b) No Material Adverse Change. There shall not have
occurred any material adverse change from the date of this
Agreement through the Closing Date in the financial condition,
results of operations, business or prospects of Holding's
consolidated group. For purposes of the preceding sentence:
(A) any adverse change (i) occurring as a result of a loan that
was approved by FCC in accordance with subsection 5.07(m) hereof,
after having received from Bank full disclosure of all material
facts concerning such loan, or (ii) resulting from the transfer
of employees of Holding or Bank to positions at FNBLC will not be
considered a material adverse change for purposes of this
subsection 6.02(b), (B) decreases, if any, in deposits of
Holding's consolidated group occurring after the date of this
Agreement shall not, of themselves, be considered a material
adverse change in the financial condition, results of operations,
business or prospects of Holding's consolidated group for
purposes of this subsection 6.02(b) as long as such decreases do
not result from any breach by Holding or Bank of any of their
respective covenants in this Agreement; (C) decreases, if any, in
the net earnings of Holding's consolidated group occurring after
the date of this Agreement shall not, of themselves, be
considered a material adverse change in the financial condition,
results of operations, business or prospects of Holding's
consolidated group for purposes of this subsection 6.02(b) as
long as such decreases do not result from any breach by Holding
or Bank of any of their respective covenants in this Agreement;
(D) deterioration, if any, occurring after the date of this
Agreement in the quality of Holding's consolidated group's
portfolios of loans, leases (as lessor), other real estate and/or
securities shall not, of itself, be considered a material adverse
change in the financial condition, results of operations,
business or prospects of Holding's consolidated group for
purposes of this subsection 6.02(b) as long as such deterioration
does not result from any breach by Holding or Bank of any of
their respective covenants in this Agreement; (E) any departures
of employees (including officers) of Holding and/or Bank
occurring after the date of this Agreement shall not, of
themselves, be considered a material adverse change in the
financial condition, results of operations, business or prospects
of Holding's consolidated group for purposes of this
subsection 6.02(b) as long as any such departures do not result
from any breach by Holding or Bank of any of their respective
covenants in this Agreement; and (F) other adverse changes in the
financial condition, results of operations, business or prospects
of Holding's consolidated group that do not exceed in the
aggregate $200,000 shall not be considered material for purposes
of this subsection 6.02(b) as long as they do not result from any
breach by Holding or Bank of any of their respective covenants in
this Agreement (but this clause (F) shall apply exclusively for
purposes of this subsection and shall not imply a definition of
materiality for any other purpose of this Agreement). The
immediately preceding sentence is not intended to relieve
Holding's consolidated group of any breach of any representation,
warranty or covenant in this Agreement concerning events of the
character described in clauses (A) through (F) above (or
otherwise).
(c) Accountants' Letters. FCC and FNBLC shall have
received letters from Gragson, Casiday & Guillory, independent
public accountants for Holding, dated, respectively, the date of
the Proxy Statement and immediately prior to the Closing Date, in
form and substance satisfactory to FCC and FNBLC, to the effect
set forth in Exhibit D to this Agreement.
(d) Tax Consequences of Mergers. FCC and FNBLC shall have
received satisfactory assurances from their independent
accountants that the consummation of the Mergers will not be a
taxable event to FCC.
(e) Opinion of Counsel. FCC and FNBLC shall have received
from Stockwell, Sievert, Viccellio, Clements & Shaddock L.L.P.,
counsel for Holding's consolidated group, an opinion dated as of
the Closing Date, in form and substance satisfactory to FCC and
FNBLC, to the effect set forth in Exhibit E to this Agreement.
(f) Joinder of Shareholders; Confirmation. A Joinder of
Shareholders in the form of Exhibit F-1 annexed hereto shall have
been executed contemporaneously with this Agreement by each
person who serves as a director of Holding (other than Malcolm
Martin) or Bank or who owns 5% or more of the Holding Common
Stock outstanding, including without limitation Mary Ellen
Chavanne, Hazel Prince Chavanne, Claire G. Turner, Harry J.
Chavanne, Jeannie C. McGann and David P. Chavanne. A Joinder in
the form set forth in Exhibit F-2 shall be executed
contemporaneously with this Agreement by the three officers with
employment contracts. A Non-Competition Agreement shall be
executed contemporaneously with this Agreement by Tom A.
Flanagan, Jr. in lieu of executing a Joinder. FCC and FNBLC
shall have received from each person who executes a Joinder of
Shareholders a written confirmation dated not earlier than 5 days
prior to the Closing Date to the effect that each representation
made by such person in the Joinder of Shareholders is true and
correct as of the date of such confirmation and that such person
has complied with all of his or her covenants therein through the
date of such confirmation.
(g) Pooling-of-Interests. Neither FCC's independent
accountants nor the SEC shall have taken the position that the
transactions contemplated by this Agreement and the Merger
Agreements do not qualify for pooling-of-interests accounting
treatment under generally accepted accounting principles unless
such position is based solely upon action taken by FCC.
(h) [Omitted]
(i) Schedule Regarding Deductible Amount. FCC and FNBLC
shall have received from Holding a schedule showing each
component of the Deductible Amount, as required by subsection
5.19, at least five days prior to the Closing Date.
(j) Non-competition Agreement. That non-competition
agreement executed by Tom A. Flanagan, Jr., FCC and FNBLC
contemporaneously with the execution of this Agreement shall be
in full force and effect.
(k) Additional Non-competition Agreements. The three
officers of Bank with employment contracts shall have, by the
later of (a) five days after the date of the shareholders meeting
of Holding held to obtain approval of this Agreement or (b) any
date specified by FCC upon not less than five days advance notice
to Holding and Bank, either (i) executed non-competition
agreements with FCC and FNBLC in form and substance satisfactory
to FCC providing that such persons will not compete with FCC or
FNBLC for a period of at least six months after the Effective
Date or (ii) left the employment of Holding and Bank in all
capacities other than as directors of Holding.
(l) P&A Agreement. The transactions contemplated by the
P&A Agreement and any other Divestiture Agreement shall have been
consummated, or shall be consummated simultaneously with the
Closing.
6.03 Additional Conditions of Holding and Bank. The
obligations of Holding and Bank to consummate the Mergers are
also subject to the satisfaction of the following additional
conditions at or prior to the Closing:
(a) Representations, Warranties and Covenants. Each of the
representations and warranties of FCC and FNBLC contained in this
Agreement shall be true and correct on the Closing Date, with the
same effect as though made at such date, except to the extent of
changes permitted by the terms of this Agreement, and each of FCC
and FNBLC shall have performed all obligations and complied with
all covenants required by this Agreement and the Merger
Agreements to be performed or complied with by it at or prior to
the Closing. In addition, each of FCC and FNBLC shall have
delivered to Holding and Bank its certificate dated as of the
Closing Date and signed by its chief executive officer and chief
financial officer to the effect that, except as specified in such
certificate, such persons do not know, and have no reasonable
grounds to know, of any material failure or breach of any
representation, warranty or covenant made by it in this
Agreement.
(b) Opinion of Counsel. Holding shall have received from
Correro, Fishman & Casteix, L.L.P., counsel for FCC and FNBLC, an
opinion, dated as of the Closing Date, in form and substance
satisfactory to Holding and Bank, to the effect set forth in
Exhibit G annexed to this Agreement.
(c) Opinion of Investment Bankers. Holding shall have
received an opinion, dated within ten days prior to the mailing
of the Proxy Statement to shareholders of Holding, from Southard
Financial, in form and substance satisfactory to Holding, to the
effect that the terms of the transactions as contemplated by this
Agreement and the Merger Agreements are fair to Holding and its
shareholders from a financial point of view.
(d) Material Adverse Change. There shall not have occurred
any material adverse change from September 30, 1994 to the
Effective Date in the financial condition, results of operations,
business or prospects of FCC's consolidated group taken as a
whole.
6.04 Waiver of Conditions. Any condition to a party's
obligations hereunder may be waived by that party, other than the
conditions specified in subparagraphs (a), (b) and (d) of
subsection 6.01. The failure to waive any condition hereunder
shall not be deemed a breach of subsection 5.02 hereof.
SECTION 7
Termination
7.01 Termination. This Agreement may be terminated at any
time before the time at which the Holding Company Merger becomes
effective:
(a) Mutual Consent. By the mutual consent of the Boards of
Directors of FCC and Holding.
(b) Material Breach. By the Board of Directors of either
FCC or Holding in the event of a material breach or material
anticipatory breach by any member of the consolidated group of
the other of them of any representation or warranty contained in
this Agreement or of any covenant or other provision contained in
this Agreement, which in either case cannot be cured within 10
days after written notice of such breach is given to the entity
committing such breach, provided that the right to effect such
cure shall not extend beyond the date provided in clause (i) of
subparagraph (c) below. The Board of Directors of FNBLC and Bank
shall be entitled to terminate this Agreement for any reason that
would permit the Board of Directors of FCC or Holding,
respectively, to terminate it.
(c) Abandonment. By the Board of Directors of either FCC
or Holding if (i) all conditions to Closing required by Section 6
have not been met or waived by June 30, 1995 (except that if at
such date or at any time within 15 days prior thereto there
remain unfulfilled any conditions to Closing that involve any
regulatory or other governmental agency, then such date shall be
extended until the earlier of (A) the 15th day after all such
conditions are fulfilled, or (B) August 31, 1995), or (ii) any
such condition, other than any involving any regulatory or other
governmental agency, cannot be met by June 30, 1995, and has not
been waived by each party in whose favor such condition runs, or
(iii) any condition involving any regulatory or other
governmental agency cannot be met by August 31, 1995, or (iv) the
Holding Company Merger has not occurred by the date provided in
clause (i) above.
(d) Dissenting Shareholders. By the Board of Directors of
FCC or FNBLC, if the number of shares of Holding Common Stock as
to which the holders thereof are, at the time of the Closing,
legally entitled to assert dissenting shareholder's rights plus
the number of such shares as to which the holders thereof are
entitled to receive cash payments in lieu of fractional shares,
exceeds, in the aggregate, 9.9% of the total number of shares of
Holding Common Stock issued and outstanding on the Closing Date.
(e) Holding Recommendation. By the Board of Directors of
either FCC or FNBLC if the Board of Directors of Holding (A)
shall withdraw, modify or change its recommendation to its
shareholders of this Agreement or the Mergers or shall have
resolved to do any of the foregoing; (B) shall have recommended
to the shareholders of Holding (i) any merger, consolidation,
share exchange, business combination or other similar transaction
(other than the transactions contemplated by this Agreement),
(ii) any sale, lease, transfer or other disposition of all or
substantially all of the assets of any member of Holding's
consolidated group, or (iii) any acquisition, by any person or
group, of the beneficial ownership of 15% or more of any class of
Holding capital stock; or (C) shall have made any announcement of
a proposal, plan or intention to do any of the foregoing or
agreement to engage in any of the foregoing.
(f) Holding Board. By the Board of Directors of Holding:
(i) by notice given to FCC within 30 days after the date of this
Agreement if Holding is not satisfied, in its sole discretion,
with its due diligence investigation of the financial condition
and prospects of FCC's consolidated group; or (ii) if: (A) all
regulatory applications required to be filed with the OCC and
Federal Reserve Board for approval to effect the Mergers have not
been filed by the date that is 60 days following the date of this
Agreement, or have not been amended within 15 days after any
request by such regulators for such an amendment; or (B) the
Registration Statement referred to in Section 5.14 has not been
filed with the SEC by the date that is 60 days following the date
of this Agreement, or is not amended within 30 days after any
request for such an amendment by the SEC staff; or (C) a letter
or other communication from the Department of Justice setting
forth the divestitures required in order for that Department not
to object to the Mergers on antitrust grounds has not been
requested by the date that is 30 days following the date of this
Agreement; or (D) the P&A Agreement has not been entered into
with a qualified acquiror by the date that is 60 days following
the date of this Agreement; provided, however, that each of the
foregoing dates set forth in clauses (A) through (D) shall be
extended to any extent that the action referred to was delayed by
acts or failures to act of Holding or Bank; and further provided
that the right of Holding and Bank to terminate under clauses (A)
through (D) of this subsection shall, as to each independent
ground for such termination, end on the 15th day following the
date on which Holding or Bank is notified by FCC of the existence
of such ground, which notice shall be in writing and shall be
given as soon as practicable after FCC learns of such existence.
(g) FCC Board. By the Board of Directors of FCC: (i) by
notice given to Holding within 30 days after the date of this
Agreement if FCC is not satisfied, in its sole discretion, with
its due diligence investigation of the financial condition and
prospects of Holding's consolidated group, except that neither
FCC nor FNBLC will assert as a ground for termination of this
Agreement any of the claims that have been made in that certain
lawsuit entitled Martin vs. Lakeside Bancshares, Inc., et al or
any settlement or judgment based on those claims; or (ii) by
notice given to Holding within 75 days following the date of this
Agreement if the P&A Agreement has not been entered into with a
qualified acquiror by the date that is 60 days following the date
of this Agreement.
7.02 Effect of Termination; Survival. Upon termination of
this Agreement pursuant to this Section 7, the Merger Agreements
shall also terminate, and this Agreement and the Merger
Agreements shall be void and of no effect, and there shall be no
liability by reason of this Agreement or the Merger Agreements,
or the termination thereof, on the part of any party or their
respective directors, officers, employees, agents or shareholders
except (a) for any liability of a party hereto arising out of a
breach of any covenant that survives pursuant to the following
sentence, and (b) in the case of any termination other than a
termination pursuant to subsection 7.01(a), 7.01(d), 7.01(f) or
7.01(g)(i), for any liability of a party hereto arising out of a
breach of any representation, warranty or covenant in this
Agreement prior to the date of termination. The following
provisions shall survive any termination of this Agreement: the
last sentence of subsection 5.01; subsection 7.02; and Section 9.
SECTION 8
Indemnification of Directors and Officers of Holding and Bank
8.01 From and after the Effective Time of the Mergers, FCC
and FNBLC agree to indemnify and hold harmless each person who is
an officer or director of Holding or Bank on the date of this
Agreement or has served as a director at any time since January
1, 1990 (an "Indemnified Person") from and against all damages,
liabilities, judgments and claims (and related expenses,
including, but not limited to, attorneys' fees and amounts paid
in settlement) based upon or arising from his capacity as an
officer or director of Holding or Bank, to the same extent as he
would have been indemnified under the articles of association (or
articles of incorporation) or bylaws of Holding or Bank, as
appropriate, as such articles of association (or articles of
incorporation) or bylaws were in effect on July 21, 1994.
8.02 The rights granted to the Indemnified Persons hereby
will be contractual rights inuring to the benefit of all
Indemnified Persons and shall survive this Agreement and any
merger, consolidation or reorganization of FCC or FNBLC.
8.03 The rights to indemnification granted by this Section 8
are subject to the following limitations: (a) the total
aggregate indemnification to be provided by FCC and/or FNBLC
pursuant to Section 8.01 hereof will not exceed, as to all of the
Indemnified Persons described herein as a group, the sum of $5
million, and FCC and FNBLC will have no responsibility to any
Indemnified Person for the manner in which such sum is allocated
among that group (but the Indemnified Persons may seek
reallocation among themselves); (b) a director of officer who
would otherwise be an Indemnified Person under this Section 8
shall not be entitled to the benefits hereof unless such director
or officer has executed a Joinder of Shareholders (the "Joinder
of Shareholders") substantially in the form annexed to this
Agreement or an alternative document permitted by clause (f) of
subsection 6.02; (c) amounts otherwise required to be paid by FCC
to an Indemnified Person pursuant to this Section 8 will be
reduced by any amounts that such Indemnified Person recovers by
virtue of the claim for which indemnification is sought; (d) no
Indemnified Person shall be entitled to indemnification for any
claim made prior to the Closing Date of which such Indemnified
Person, Holding or Bank was aware but did not promptly disclose
to FCC and FNBLC prior to the Closing Date; (e) any claim for
indemnification pursuant to this Section 8 must be submitted in
writing to the Chief Executive Officer of FCC promptly upon such
Indemnified Person becoming aware of such claim; and (f) an
Indemnified Person shall not settle any claim for which
indemnification is provided herein without the prior written
consent of FCC or FNBLC.
8.04 FCC and FNBLC agree that the indemnification limit set
forth in Section 8.03(a) will not apply to any damages,
liabilities, judgments and claims (and related expenses,
including, but not limited to, attorney's fees and amounts paid
in settlement) insofar as they arise out of or are based upon any
misstatement by FCC or FNBLC of a material fact in the
Registration Statement or are based upon an omission by FCC or
FNBLC of a material fact required to be stated therein, or
necessary in order to make a statement therein not misleading
unless such statement or omission was based upon information
supplied by Holding or Bank for inclusion therein.
8.05 Indemnification Against Claims in Martin Litigation.
Without limiting the generality of the foregoing, FCC and FNBLC
agree that the indemnification set forth in this Section 8
specifically applies to any claims against an Indemnified Person,
whether direct, indirect or from whatever source, in connection
with Martin vs. Lakeside Bancshares, Inc., et al or any
subsequent litigation filed by Martin involving substantially the
same claims.
SECTION 9
Miscellaneous
9.01 Notices. Any notice, communication, request, reply,
advice or disclosure (hereinafter severally and collectively
called "notice") required or permitted to be given or made by any
party to another in connection with this Agreement or the Merger
Agreements or the transactions herein or therein contemplated
must be in writing and may be given or served by depositing the
same in the United States mail, postage prepaid and registered or
certified with return receipt requested, or by delivering the
same to the address of the person or entity to be notified, or by
sending the same by a national commercial courier service (such
as Federal Express, Emery Air Freight, Network Courier, Purolator
or the like) for next-day delivery provided such delivery is
confirmed in writing by such courier. Notice deposited in the
mail in the manner hereinabove described shall be effective 48
hours after such deposit, and notice delivered in person or by
commercial courier shall be effective at the time of delivery. A
party delivering notice shall endeavor to obtain a receipt
therefor. For purposes of notice, the addresses of the parties
shall, until changed as hereinafter provided, be as follows:
If to FCC:
First Commerce Corporation
210 Baronne Street
New Orleans, Louisiana 70112
Attention: Mr. Ian Arnof
With copies to:
First Commerce Corporation
210 Baronne Street
New Orleans, Louisiana 70112
Attention: Mr. Michael A. Flick
and
Mr. Anthony J. Correro, III
Correro, Fishman & Casteix
201 St. Charles Avenue, 47th Floor
New Orleans, Louisiana 70170
If to FNBLC:
First National Bank of Lake Charles
3401 Ryan Street
Lake Charles, Louisiana 70605
Attention: Mr. Robert Ryder
With copies as aforesaid
If to Holding or Bank:
Lakeside Bancshares, Inc.
One Lakeside Plaza
Box 1268
Lake Charles, Louisiana 70602
With copy to:
Mr. Jeffrey C. Gerrish
Gerrish & McCreary, P.C.
700 Colonial Road, Suite 200
Memphis, Tennessee 38117
and
Mr. William B. Monk
Stockwell, Sievert, Vicellio
One Lakeside Plaza
Lake Charles, Louisiana 70601
and
Mr. Thomas M. Bergstedt
Bergstedt & Mount
Magnolia Life Building
1101 Lakeshore Drive, 2nd Floor
Lake Charles, Louisiana 70607
or such substituted persons or addresses of which any of the
parties may give notice to the other in writing.
9.02 Waiver. The failure by any party to enforce any of its
rights hereunder shall not be deemed to be a waiver of such
rights, unless such waiver is an express written waiver which has
been signed by the waiving party and expressly approved by its
Board of Directors. Waiver of any one breach shall not be deemed
to be a waiver of any other breach of the same or any other
provision hereof.
9.03 Expenses. Regardless of whether the Mergers are
consummated, all expenses incurred in connection with this
Agreement and the Merger Agreements and the transactions
contemplated hereby and thereby shall be borne by the party
incurring them and shall not reduce the consideration to be paid
to Holding's shareholders, except for such expenses as are
included in the Deductible Amount, as defined by and provided in
Section 4.2 of the Holding Company Merger Agreement.
9.04 Headings. The headings in this Agreement have been
included solely for reference and shall not be considered in the
interpretation or construction of this Agreement.
9.05 Exhibits and Schedules. The exhibits and schedules to
this Agreement are incorporated herein by this reference and
expressly made a part hereof.
9.06 Integrated Agreement. This Agreement, the Merger
Agreements, the exhibits and schedules hereto and all other
documents and instruments delivered in accordance with the terms
hereof constitute the entire understanding and agreement among
the parties hereto with respect to the subject matter hereof, and
there are no agreements, understanding, restrictions,
representations or warranties among the parties other than those
set forth herein or therein or herein or therein provided for,
all prior agreements and understandings being superseded hereby
including (without limitation) the prior "Agreement and Plan of
Merger" among the parties dated July 21, 1994 (the "Prior Plan")
and the "Merger Agreements" referred to in the Prior Plan. The
parties release, acquit and forever discharge each other of and
from any and all claims, liabilities and obligations under the
Prior Plan (including, without limitation, the "Merger
Agreements" thereunder).
9.07 Choice of Law. The validity of this Agreement and the
Merger Agreements, the construction of their terms and the
determination of the rights and duties of the parties hereto in
accordance therewith shall be governed by and construed in
accordance with the laws of the United States and those of the
State of Louisiana applicable to contracts made and to be
performed wholly within such State.
9.08 Parties in Interest. This Agreement shall bind and
inure to the benefit of the parties hereto and their respective
successors and assigns, except that this Agreement may not be
transferred or assigned by any member of Holding's consolidated
group without the prior written consent of FCC and FNBLC,
including any transfer or assignment by operation of law.
Nothing in this Agreement or the Merger Agreements is intended or
shall be construed to confer upon or to give any person other
than the parties hereto any rights or remedies under or by reason
of this Agreement or the Merger Agreements, except as expressly
provided for herein and therein.
9.09 Amendment. The parties may, by mutual agreement of
their respective Boards of Directors, amend, modify or supplement
this Agreement, the Merger Agreements, or any exhibit or schedule
of any of them, in such manner as may be agreed upon by the
parties in writing, at any time before or after approval of this
Agreement and the Merger Agreements and the transactions
contemplated hereby and thereby by the shareholders of the
parties hereto. This Agreement and any exhibit or schedule to
this Agreement may be amended at any time and, as amended,
restated by the chief executive officers of the respective
parties (or their respective designees) without the necessity for
approval by their respective Boards of Directors or shareholders,
to correct typographical errors or to change erroneous references
or cross references, or in any other manner which is not material
to the substance of the transactions contemplated hereby.
9.10 Counterparts. This Agreement may be executed by the
parties in one or more counterparts, all of which shall be deemed
an original, but all of which taken together shall constitute one
and the same instrument.
9.11 Non-Survival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any
instrument delivered pursuant hereto shall survive the Effective
Time of the Mergers. Each party hereby agrees that its sole
right and remedy with respect to any breach of a representation
or warranty by the other party or the breach of the covenants set
forth in subsection 5.07(f) hereof shall be not to close the
transactions subscribed herein if such breach results in the
nonsatisfaction of a condition set forth in Section 6 hereof;
provided, however, that the foregoing shall not be deemed to be a
waiver of any claim for an intentional breach of a representation
or warranty or for fraud except if such breach is required by law
or by any bank or bank holding company regulatory authority; it
being understood that a disclosure in any closing certificate
provided in accordance with Section 6.02(a) or 6.03(a) hereof
concerning an inaccuracy of a representation or warranty shall
not of itself be deemed to be an intentional breach of such
representation or warranty.
9.12 Materiality. In each instance in which materiality is
to be determined for purposes of this Agreement with respect to
any member of a consolidated group, it shall be determined by
reference to the consolidated group taken as a whole rather than
by reference to such member individually.
[ALL SIGNATURE PAGES HAVE BEEN INTENTIONALLY OMITTED.]
<PAGE>
EXHIBIT A
JOINT AGREEMENT OF MERGER
OF
LAKESIDE BANCSHARES, INC.
WITH AND INTO
FIRST COMMERCE CORPORATION
This Joint Agreement of Merger (this "Joint Agreement") is
dated as of the _____day of February, 1995, between Lakeside
Bancshares, Inc., a Louisiana corporation ("Holding"), and First
Commerce Corporation, a Louisiana corporation ("FCC"); and is
entered into pursuant to the provisions of Sections 111 et seq.
of the Louisiana Business Corporation Law ("LBCL").
WHEREAS, as required by law, at least a majority of the
members of the respective Boards of Directors of Holding and FCC
(collectively, the "Merging Corporations") deem it advisable that
Holding be merged with and into FCC (the "Merger"), as provided
in this Joint Agreement and in the Agreement and Plan of Merger
dated as of February _____, 1995 (the "Plan"), among First
National Bank of Lake Charles (which is a wholly-owned subsidiary
of FCC), Lakeside National Bank ("Bank") (which is a wholly-owned
subsidiary of Holding), Holding and FCC, which sets forth, among
other things, certain representations, warranties, covenants and
conditions relating to the Merger; and
WHEREAS, as required by law, at least a majority of the
members of the respective Boards of Directors of the Merging
Corporations wish to enter into this Joint Agreement and submit
it to the shareholders of Holding for approval in the manner
required by law (approval by the shareholders of FCC not being
required by virtue of Section 112E of the LBCL) and, subject to
such approval and to such other approvals as may be required, to
effect the Merger, all in accordance with the provisions of this
Joint Agreement.
NOW THEREFORE, in consideration of the mutual benefits to be
derived from this Joint Agreement and the Merger, the parties
hereto agree as follows:
1. THE MERGER
In accordance with the applicable provisions of the LBCL,
Holding shall be merged with and into FCC; the separate existence
of Holding shall cease; and FCC shall be the corporation
surviving the merger.
2. EFFECTIVENESS OF THE MERGER
2.1 Effective Time of the Merger. The Merger shall become
effective at the time (the "Effective Time") at which this Joint
Agreement, having been executed and acknowledged in the manner
required by law, is filed in the office of the Secretary of State
of Louisiana.
2.2 Effect of the Merger. At the Effective Time, (i) the
separate existence of Holding shall cease and Holding shall be
merged with and into FCC; (ii) FCC shall continue to possess all
of the rights, privileges and franchises possessed by it and
shall, at the Effective Time, become vested with and possess all
rights, privileges and franchises possessed by Holding; (iii) FCC
shall be responsible for all of the liabilities and obligations
of Holding in the same manner as if FCC had itself incurred such
liabilities or obligations, and the Merger shall not affect or
impair the rights of the creditors or of any persons dealing with
the Merging Corporations; (iv) the Merger will not of itself
cause a change, alteration or amendment to the Articles of
Incorporation or the By-Laws of FCC; (v) the Merger will not of
itself affect the tenure in office of any officer or director of
FCC and no such person will succeed to such positions solely by
virtue of the Merger; and (vi) the Merger shall, from and after
the Effective Time, have all the effects provided by applicable
Louisiana law.
2.3 Additional Actions. If, at any time after the
Effective Time, FCC shall consider or be advised that any further
assignments or assurances in law or any other acts are necessary
or desirable (a) to vest, perfect or confirm, of record or
otherwise, in FCC, title to or the possession of any property or
right of Holding acquired or to be acquired by reason of, or as a
result of, the Merger, or (b) otherwise to carry out the purposes
of this Joint Agreement, Holding and its proper officers and
directors shall be deemed to have granted to FCC an irrevocable
power of attorney to execute and deliver all such proper deeds,
assignments and assurances in law and to do all acts necessary or
proper to vest, perfect or confirm title to and possession of
such property or rights in FCC and otherwise to carry out the
purposes of this Joint Agreement; and the proper officers and
directors of FCC are fully authorized in the name of Holding to
take any and all such action.
3. METHOD OF CARRYING MERGER INTO EFFECT
This Joint Agreement shall be submitted to the shareholders
of Holding for their approval. If such approval is given, then
the fact of such approval shall be certified hereon by the
Secretary of Holding. Approval of this Joint Agreement by the
shareholders of FCC is not required by virtue of Section 112E of
the LBCL, and that fact shall be certified hereon by the
Secretary of FCC. This Joint Agreement, so approved and
certified, shall, as soon as is practicable, be signed and
acknowledged by the President or Vice President of each of the
Merging Corporations. As soon as may be practicable thereafter,
this Joint Agreement, so certified, signed and acknowledged,
shall be delivered to the Secretary of State of Louisiana for
filing in the manner required by law and shall be effective at
the Effective Time; and thereafter, as soon as practicable, a
copy of the Certificate of Merger issued by the Secretary of
State of Louisiana, and certified by him to be a true copy, shall
be filed for record in the Office of the Recorder of Mortgages of
the parishes in which the Merging Corporations have their
respective registered offices and in the Office of the Recorder
of Conveyances of each parish in which Holding has immovable
property.
4. CONVERSION OF SHARES
4.1 Conversion of Holding Shares. Except for shares as to
which dissenters' rights have been perfected and not withdrawn or
otherwise forfeited under Section 131 of the LBCL, on the
Effective Date, by reason of the Merger, each issued and
outstanding share of the common stock, par value $2.50 per share,
of Holding ("Holding Common Stock") shall be converted into that
number of shares of common stock, $5.00 par value per share, of
FCC ("FCC Common Stock") equal to (i) $30 million less the
Deductible Amount, as defined below, divided by the market value
of a share of FCC Common Stock as determined as of the close of
business on the fifth day prior to the closing of the Merger
based on the average of the closing sales prices of a share of
FCC Common Stock on the NASDAQ stock market for the 20 trading
days ending on the fifth trading day before the closing date for
the Merger; divided by (ii) the number of shares of Holding
Common Stock outstanding on the Effective Date; provided that the
formula set forth above shall be adjusted to take into account
any change in the number of shares of FCC Common Stock
outstanding as a result of a stock split or stock dividend.
4.2 Deductible Amount. The term "Deductible Amount" means
the amount by which (i) the sum of (A) all expenses of Holding
and/or Bank, incurred on or after December 6, 1994, through the
Effective Time in connection with the Plan or any of the
transactions contemplated thereby or otherwise in connection with
the potential sale of Holding and/or Bank, other than investment
banking fees and charges of Chaffe & Associates, Inc. ("Chaffe
Fees"), plus (B) the greater of $85,000 or the actual aggregate
amount of Chaffe Fees incurred by Holding and/or Bank at any time
in connection with the Plan or any of the transactions
contemplated thereby or otherwise in connection with the
potential sale of Holding and/or Bank (other than any such fees
which had been paid prior to September 30, 1994), exceed
(ii) $200,000.
4.3 Fractional Shares. In lieu of the issuance of any
fractional share of FCC Common Stock to which a holder of Holding
Common Stock may be entitled (after aggregation of all fractional
shares to which such holder is entitled), each shareholder of
Holding, upon surrender of the certificate or certificates which
immediately prior to the Effective Time represented Holding
Common Stock held by such shareholder, shall be entitled to
receive a cash payment (without interest) equal to such
fractional share multiplied by the fair market value of a share
of FCC Common Stock as determined in accordance with Section 4.1.
4.4 Exchange of Certificates. After the Effective Time,
each holder of an outstanding certificate or certificates
theretofore representing shares of Holding Common Stock (other
than shares as to which dissenters' rights have been perfected
and not withdrawn or otherwise forfeited under Section 131 of the
LBCL), upon surrender thereof to FCC, shall be entitled to
receive the property into which such shares have been converted
as provided in Section 4.1 and cash in lieu of any fractional
share as provided in Section 4.3. Until so surrendered, each
outstanding certificate shall be deemed for all purposes, other
than as provided below with respect to the payment of dividends
or other distributions, if any, in respect of the FCC Common
Stock, to represent the number of whole shares of FCC Common
Stock into which the shares of Holding Common Stock theretofore
represented thereby shall have been converted. FCC may, at its
option, refuse to pay any dividend or other distribution, if any,
payable to the holders of shares of FCC Common Stock to the
holders of unsurrendered certificates evidencing Holding Common
Stock provided, however, that upon surrender of such certificates
there shall be paid to the record holders of the stock
certificate or certificates issued in exchange therefor the
amount, without interest, of dividends and other distributions,
if any, which have become payable with respect to the number of
whole shares of FCC Common Stock into which the shares of Holding
Common Stock theretofore represented thereby shall have been
converted and which have not previously been paid, unless such
dividend shall have reverted to FCC in full ownership pursuant to
its Articles of Incorporation. Whether or not a stock
certificate representing Holding Common Stock is surrendered,
from and after the Effective Time such certificate shall under no
circumstances evidence, represent or otherwise constitute any
stock or other interest in Holding or any other person, firm or
corporation (other than FCC).
4.5 Shares of FCC. The shares of capital stock of FCC
outstanding immediately prior to the Effective Time shall not be
converted by virtue of the Merger.
5. MISCELLANEOUS
5.1 Termination. Prior to the Effective Time, this Joint
Agreement may be terminated, and the Merger abandoned, as set
forth in the Plan.
5.2 Headings. The descriptive headings of the sections of
this Joint Agreement are inserted for convenience only and do not
constitute a part hereof for any other purpose.
5.3 Modifications, Amendments and Waivers. At any time
prior to the Effective Time (notwithstanding any shareholder
approval that may have already been given), the parties hereto
may, to the extent permitted by and as provided in the Plan,
modify, amend or supplement any term or provision of this Joint
Agreement.
5.4 Governing Law. This Joint Agreement shall be governed
by the laws of the State of Louisiana (regardless of the laws
that might be applicable under principles of conflicts of law) as
to all matters, including, but not limited to, matters of
validity, construction, effect and performance.
[ALL SIGNATURE PAGES HAVE BEEN INTENTIONALLY OMITTED.]
<PAGE>
EXHIBIT B
AGREEMENT OF MERGER
OF
LAKESIDE NATIONAL BANK OF LAKE CHARLES
INTO
FIRST NATIONAL BANK OF LAKE CHARLES
This Agreement of Merger (this "Agreement") is made and
entered into as of this ______ day of ________, 1995, between
Lakeside National Bank of Lake Charles, a national banking
association domiciled at Lake Charles, Louisiana ("Bank"), and
First National Bank of Lake Charles, a national banking
association domiciled at Lake Charles, Louisiana ("FNBLC" or the
"Receiving Association").
WHEREAS, as required by law, at least a majority of the
members of the respective Boards of Directors of Bank and FNBLC
(collectively called the "Merging Associations") deem it
advisable that Bank be merged with and into FNBLC (the "Bank
Merger"), as provided in this Agreement and in the Agreement and
Plan of Merger dated February ____, 1995 (the "Plan"), among the
Merging Associations, First Commerce Corporation, a Louisiana
corporation ("FCC") of which FNBLC is a wholly-owned subsidiary,
and Lakeside Bancshares, Inc., a Louisiana corporation
("Holding") of which Bank is wholly-owned subsidiary, which sets
forth, among other things, certain representations, warranties,
covenants and conditions relating to the Bank Merger; and
WHEREAS, as required by law, at least a majority of the
members of the respective Boards of Directors of the Merging
Associations wish to enter into this Agreement and submit it to
the respective shareholders of the Merging Associations for
approval in the manner required by law and, subject to said
approval and to approval by the Comptroller of the Currency of
the United States (the "Comptroller") being duly given and to
such other approvals as may be required by law, to effect the
Bank Merger, all in accordance with the provisions of this
Agreement.
NOW THEREFORE, in consideration of the mutual benefits to be
derived from this Agreement and the Bank Merger, the parties
hereto agree as follows:
1. The Bank Merger. At the Effective Time (as defined in
Section 2 hereof), Bank and FNBLC shall be merged with and into
FNBLC under the Articles of Association of FNBLC, as amended,
existing Charter No. 4154, pursuant to the provisions of, and
with the effect provided in, 12 U.S.C. Section 215a and La. R.S.
6:351 et seq. At the Effective Time, FNBLC, the Receiving
Association, shall continue to be a national banking association,
and its business shall continue to be conducted at its main
office in Lake Charles, Louisiana, and at its legally established
branches (including, without limitation, the legally established
offices from which Bank conducted business immediately prior
to the Effective Time). The Articles of Association of FNBLC
shall not be altered or amended by virtue of the Bank Merger,
and the incumbency of the directors and officers of FNBLC shall
not be affected by the Bank Merger nor shall any person succeed
to such positions by virtue of the Bank Merger; provided that
it is the present intention of FNBLC to add Tom Flanagan,
President of Holding, to its Board of Directors.
2. Effective Time. The Bank Merger shall become effective
at the time specified or permitted by the Comptroller in a
certificate or other written record issued by his Office (the
"Effective Time").
3. Cancellation of Capital Stock of Bank. At the
Effective Time, by virtue of the Bank Merger, all shares of the
capital stock of Bank, other than any such shares as to which
dissenters' rights shall exist at the Effective Time, shall be
cancelled.
4. Capital Stock of the Receiving Association. The shares
of the capital stock of FNBLC, the Receiving Association, issued
and outstanding immediately prior to the Effective Time shall, at
the Effective Time, continue to be issued and outstanding, and no
additional shares of FNBLC shall be issued as a result of the
Bank Merger. Therefore, at the Effective Time, the amount of
capital stock of FNBLC, the Receiving Association, shall be
$1,500,000, divided into 150,000 shares of common stock, par
value $10.00 per share.
5. Assets and Liabilities of the Merging Associations. At
the Effective Time, the corporate existence of each of the
Merging Associations shall be merged into and continued in FNBLC,
the Receiving Association, and such Receiving Association shall
be deemed to be the same corporation as each bank or banking
association participating in the Bank Merger. All rights,
franchises, and interests of the individual Merging Associations
in and to every type of property (real, personal and mixed) and
chooses in action shall be transferred to and vested in the
Receiving Association by virtue of the Bank Merger without any
deed or other transfer. The Receiving Association, upon the Bank
Merger and without any order or other action on the part of any
court or otherwise, shall hold and enjoy all rights of property,
franchises, and interests, including appointments, designations,
and nominations, and all other rights and interests as trustee,
executor, administrator, registrar of stocks and bonds, guardian
of estates, and in every other fiduciary capacity, in the same
manner and to the same extent as such rights, franchises, and
interests were held or enjoyed by any one of the Merging
Associations at the time of the Bank Merger, subject to the
conditions specified in 12 U.S.C. Section 215a(f). The
Receiving Association shall, from and after the Effective Time,
be liable for all liabilities of the Merging Associations.
6. Shareholder Approval; Conditions; Filing. This
Agreement shall be submitted to the shareholders of the Merging
Associations for ratification and confirmation in accordance with
applicable provisions of law. The obligations of the Merging
Associations to effect the Bank Merger shall be subject to all
the terms and conditions of the Plan. If the shareholders of the
Merging Associations ratify and confirm this Agreement, then the
fact of such approval shall be certified hereon by the Secretary
of each of the Merging Associations and this Agreement, so
approved and certified, shall, as soon as is practicable, be
signed and acknowledged by the President or Vice-President of
each of them. As soon as may be practicable thereafter, this
Agreement, so certified, signed and acknowledged, shall be
delivered to the Comptroller for filing in the manner required by
law.
7. Miscellaneous. This Agreement may, at any time prior
to the Effective Time, be amended or terminated as provided in
the Plan. This Agreement may be executed in counterparts, each
of which shall be deemed to constitute an original. This
Agreement shall be governed and interpreted in accordance with
federal law and the applicable laws of the State of Louisiana.
This Agreement may be assigned only to the extent that the party
seeking to assign it is permitted to assign its interests in the
Plan, and subject to the same effect as any such assignment. The
headings in this Agreement are inserted for convenience only and
are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.
[ALL SIGNATURE PAGES HAVE BEEN INTENTIONALLY OMITTED.]
[ALL OTHER EXHIBITS HAVE BEEN INTENTIONALLY OMITTED.]
<PAGE>
APPENDIX B
SOUTHARD FINANCIAL
FAIRNESS OPINION
<PAGE>
FAIRNESS OPINION
MERGER BY AND BETWEEN
FIRST COMMERCE CORPORATION
AND
LAKESIDE BANCSHARES, INC.
Report Dated
April 20, 1995
<PAGE>
April 20, 1995
Board of Directors
Lakeside Bancshares, Inc.
Lake Charles, Louisiana
RE: Fairness Opinion Relative to Pending Agreement of
Lakeside Bancshares, Inc., Lake Charles, Louisiana,
to Merge with and into First Commerce Corporation,
New Orleans, Louisiana
Gentlemen:
The Board of Directors of Lakeside Bancshares, Inc. ("Lakeside")
retained Southard Financial, in its capacity as a financial
valuation and consulting firm, to render its opinion of the
fairness, from a financial viewpoint, of the acquisition of
Lakeside by First Commerce Corporation ("FCOM"). Initially,
Southard Financial issued an opinion that the proposed merger was
fair as of August 3, 1994, based upon terms of the original
agreement dated July 21, 1994.
Since the date of the August 3, 1994 opinion, Lakeside and FCOM
negotiated and executed a new merger agreement dated February 27,
1995 that contained substantially different pricing terms from
the original July 21, 1994 agreement. This opinion relates to
the terms from a financial viewpoint of the February 27, 1995
agreement.
Southard Financial and its principals have no past, present, or
future contemplated financial, equity, or other interest in
either Lakeside or FCOM. This opinion is issued based upon
financial data for both institutions as of December 31, 1994.
Approach to Assignment
The approach to this assignment was to consider the following
factors:
. A review of the financial performance and position of
Lakeside and the value of its common stock;
. A review of the financial performance and position of
FCOM and the value of its common stock;
. A review of recent Bank merger transactions;
. A review of the current and historical market prices
of bank holding companies in Louisiana and
surrounding states;
. A review of the investment characteristics of the
common stock of Lakeside and FCOM;
. A review of the Agreement and Plan of Merger between
First Commerce Corporation and Lakeside Bancshares,
Inc., dated February 27, 1995;
. An evaluation of the impact of the merger on the
expected return to the current shareholders of
Lakeside; and,
. An evaluation of other factors as were considered
necessary to render this opinion.
It is Southard Financial's understanding that the merger and
resulting exchange of the stock of First Commerce Corporation for
the outstanding common stock of Lakeside Bancshares, Inc.
constitutes a non-taxable exchange for federal income tax
purposes.
DUE DILIGENCE REVIEW PROCESS
In performing this assignment, Southard Financial reviewed the
documents specifically outlined in Exhibit 1 pertaining to
Lakeside Bancshares, Inc. and in Exhibit 2 pertaining to First
Commerce Corporation.
Review of Lakeside Bancshares, Inc.
Southard Financial visited with the management of Lakeside in
Lake Charles, Louisiana. Discussions included questions
regarding the current and historical financial position and
performance of Lakeside, its outlook for the future, and other
pertinent factors.
Review of First Commerce Corporation
Southard Financial visited with several senior officers of FCOM
in New Orleans, Louisiana. Discussions included questions
regarding the current and historical financial position and
performance of FCOM and its operating subsidiaries, its outlook
for the future, and other pertinent factors. It should be noted
that FCOM management did not make available any information other
than publicly available annual reports and SEC regulatory filings
(see Exhibit 2). Southard Financial was not given access to
other information typically provided in a due diligence review,
such as board minutes, current year budget, details of problem
loans and other real estate, etc.
Merger Documentation
Southard Financial reviewed the Agreement and Plan of Merger
Between First Commerce Corporation (and its wholly-owned
subsidiary, First National Bank of Lake Charles) and Lakeside
Bancshares, Inc. (and its wholly-owned subsidiary, Lakeside
National Bank), dated February 27, 1995. Appropriate aspects of
this agreement were discussed with management and with legal
counsel for Lakeside. (See Exhibit 3, Terms of the Agreement and
Plan of Merger.)
Southard Financial did not independently verify the information
reviewed, but relied on such information as being complete and
accurate in all material respects. Southard Financial did not
make any independent evaluation of the assets of FCOM or
Lakeside, but reviewed data supplied by the management of both
institutions.
MAJOR CONSIDERATIONS
Numerous factors were considered in the overall review of the
proposed merger. The review process included considerations
regarding Lakeside, FCOM, and the proposed merger. The major
considerations are as follows:
Lakeside Bancshares, Inc.
. Historical earnings;
. Historical dividend payments;
. Outlook for future performance, earnings, and dividends;
. Economic conditions and outlook in Lakeside's market;
. The competitive environment in Lakeside's market;
. Comparisons with peer banks;
. Potential risks in the loan and securities portfolios;
. Recent minority stock transactions in Lakeside's common
stock; and,
. Other such factors as were deemed appropriate in rendering
this opinion.
First Commerce Corporation
. Historical earnings;
. Historical dividend payments;
. Outlook for future performance, earnings, and dividends;
. Economic conditions and outlook in FCOM's market;
. The competitive environment in FCOM's market;
. Comparisons with peer banks;
. Potential risks in the loan and securities portfolios;
. Recent minority stock transactions in FCOM's common stock;
and,
. Other such factors as were deemed appropriate in rendering
this opinion.
Common Factors
. Historical and current bank merger pricing;
. Current market prices for minority blocks of common stocks
of regional bank holding companies in Louisiana and
surrounding states;
The Proposed Merger
. The merger agreement and its terms;
. The specific pricing of the merger;
. Adequacy of the consideration paid to the shareholders of
Lakeside;
. The assumption that the tax opinion regarding the tax-free
nature of the exchange will be upheld;
. The amount of debt and goodwill on the balance sheet of
FCOM and the impact of the merger of Lakeside on FCOM's
capital and liquidity positions;
. The historical dividend payments of FCOM and the likely
impact on the dividend income of the current shareholders
of Lakeside (equivalency of cash dividends);
. Pro-forma combined income statements for FCOM post merger
and the expected returns to Lakeside shareholders
(equivalency of earnings yield);
. The market for minority blocks of FCOM common stock; and,
. Other such factors as deemed appropriate.
OVERVIEW OF FAIRNESS ANALYSIS
In connection with rendering its opinion, Southard Financial
performed a variety of financial analyses, which are summarized
below. Southard Financial believes that its analyses must be
considered as a whole and that considering only selected factors
could create an incomplete view of the analyses and the process
underlying the opinion. The preparation of a fairness opinion is
a complex process involving subjective judgments and is not
susceptible to partial analyses. In its analyses, Southard
Financial made numerous assumptions, many of which are beyond the
control of Lakeside and FCOM. Any estimates contained in the
analyses prepared by Southard Financial are not necessarily
indicative of future results or values, which may vary
significantly from such estimates. Estimates of value of
companies do not purport to be appraisals or necessarily reflect
the prices at which companies or their securities may actually be
sold. None of the analyses performed by Southard Financial was
assigned a greater significance than any other. (More details on
the analyses prepared by Southard Financial are contained in
Exhibits 3-7.)
Dividend Yield Analysis
In evaluating the impact of the proposed merger on the
shareholders of Lakeside, Southard Financial reviewed the
dividend paying histories of Lakeside and FCOM. Based upon this
review, it is reasonable to expect that the shareholders of
Lakeside, in total, will receive dividends at or above the level
currently paid by Lakeside, after the merger is completed
(defined as post merger combined dividends per share times the
exchange ratio). This is predicated on the assumption that FCOM
will continue per share dividends at current levels (see Exhibit
4).
Earnings Yield Analysis
In evaluating the impact of the proposed merger on the
shareholders of Lakeside, Southard Financial determined that,
based upon the proposed exchange ratio, the shareholders of
Lakeside would have seen an increase in their share of earnings
(defined as post merger combined earnings per share times the
exchange ratio), had the merger been consummated by year-end
1994. The analysis also suggests expected higher earnings yields
for Lakeside shareholders in subsequent years if the merger is
consummated (see Exhibit 4).
Book Value Analysis
In evaluating the impact of the proposed merger on the
shareholders of Lakeside, Southard Financial determined that the
shareholders of Lakeside would have seen an increase in the book
value of their investment had the merger been consummated prior
to December 31, 1994.
Analysis of Alternatives
In evaluating the fairness of the proposed merger on the
shareholders of Lakeside, Southard Financial reviewed other
offers received for the purchase/merger of Lakeside. Further,
Southard Financial considered recent public market merger pricing
information (see Exhibit 5).
Analysis of Market Transactions
Based upon the merger terms, Lakeside shareholders will receive
179% of year-end 1994 book value per share, 19.23x reported 1994
earnings, and 17.14x budgeted 1995 earnings. Based upon the
review conducted by Southard Financial, the pricing for Lakeside
in the merger is within the range of multiples seen in recent
bank acquisitions (see Exhibit 5).
Fundamental Analysis
Southard Financial reviewed the financial characteristics of
Lakeside and FCOM with respect to profitability, capital ratios,
liquidity, asset quality, and other factors. Southard Financial
compared Lakeside and FCOM to a universe of publicly traded banks
and bank holding companies and to peer groups prepared by the
Federal Financial Institutions Examination Council (FFIEC).
Southard Financial found that the post-merger combined entity
will have capital ratios and profitability ratios near those of
the public peer group and the FFIEC peer group (predominantly
non-publicly traded banks). (See Exhibits 6-7.)
Liquidity
Unlike Lakeside stock, FCOM shares are actively traded on the
NASDAQ market. Further, except in the case of officers,
directors, and certain principal shareholders of Lakeside, FCOM
shares received will be freely tradeable with no restrictions.
Summary of Analyses
The summary set forth does not purport to be a complete
description of the analyses performed by Southard Financial. The
analyses performed by Southard Financial are not necessarily
indicative of actual values, which may differ significantly from
those suggested by such analyses. Southard Financial did not
appraise any individual assets or liabilities of Lakeside or
FCOM.
Throughout the due diligence process, all information provided by
Lakeside, FCOM, and third party sources, was relied upon by
Southard Financial without independent verification. As noted
above, the information reviewed for FCOM was limited to publicly
available annual reports and regulatory reports.
Based upon the analyses discussed above, and other analyses
performed by Southard Financial, the impact of the merger on the
shareholders of Lakeside Bancshares, Inc. is expected to be
favorable.
FAIRNESS OPINION
Based upon the analyses of the foregoing and such matters as were
considered relevant, it is the opinion of Southard Financial that
the terms of the offer for the acquisition of Lakeside
Bancshares, Inc. by First Commerce Corporation in accordance with
the Agreement and Plan of Merger dated February 27, 1995 are
fair, from a financial viewpoint, to the shareholders of Lakeside
Bancshares, Inc.
Thank you for this opportunity to be of service to the
shareholders of Lakeside Bancshares, Inc.
Sincerely yours,
SOUTHARD FINANCIAL
David A. Harris, CFA, ASA
Douglas K. Southard, DBA, CFA, ASA
Attachments:
Exhibit 1: Lakeside Bancshares, Inc. and Lakeside National
Bank of Lake Charles, Document Review List
Exhibit 2: First Commerce Corporation, Document Review List
Exhibit 3: Terms of the Agreement and Plan of Merger
Exhibit 4: Expected Impact of the Merger on the Shareholders
of Lakeside Bancshares, Inc.
Exhibit 5: Comparison of The Merger Pricing to Public Market
Transactions
Exhibit 6: Overview of Lakeside Bancshares, Inc. and Lakeside
National Bank of Lake Charles
Exhibit 7: Overview of First Commerce Corporation
Exhibit 8: Qualifications of Southard Financial
<PAGE>
EXHIBIT 1
LAKESIDE BANCSHARES, INC.
AND
LAKESIDE NATIONAL BANK OF LAKE CHARLES
DOCUMENT REVIEW LIST
1. Consolidated Reports of Condition and Income ("Call
Report") for the periods ended December 31, 1993, March 31,
1994, June 30, 1994, September 30, 1994, and December 31,
1994.
2. Uniform Bank Performance Report ("UBPR") for the periods
ended December 31, 1993-94.
3. Annual Reports for 1989-94.
4. Securities and Exchange Commission Annual Report (Form 10-
K) for the year ended December 31, 1993-94.
5. Securities and Exchange Commission Quarterly Report (Form
10-Q) for the quarters ended March 31, 1993-94, June 30,
1993-94, and September 30, 1993-94.
6. Budget Comparison as of March 31, 1995, with 1995 full-year
budget.
7. Summary analysis of loan loss reserve calculation and
determination of adequacy.
8. Shareholder list as of June 16, 1994.
9. Litigation letter, dated April 28, 1994, from Stockwell,
Sievert, Viccellio, Clements & Shaddock, L.L.P., Lake
Charles, Louisiana.
10. Local economic data.
11. Offer letters from other institutions.
12. Additional pertinent information deemed necessary to render
this opinion.
<PAGE>
EXHIBIT 2
FIRST COMMERCE CORPORATION
DOCUMENT REVIEW LIST
1. Annual Reports (including audited financial statements) for
the years ended December 31, 1992-94.
2. Quarterly Report (including reviewed financial statements)
for the quarter ended March 31, 1994.
3. Securities and Exchange Commission Annual Report (Form 10-
K) for the years ended December 31, 1992-94.
4. Securities and Exchange Commission Quarterly Report (Form
10-Q) for the quarters ended March 31, 1992-94, June 30,
1992-94, and September 30, 1992-94.
5. Research reports by CS First Boston; First Manhattan Co.;
Tucker Anthony, Inc.; Donaldson, Lufkin & Jenrette
Securities Corporation; Dean Witter Reynolds, Inc.; Alex
Brown & Sons; Morgan Keegan & Company, Inc.; and J.C.
Bradford & Co.
6. Additional pertinent information deemed necessary to render
this opinion.
<PAGE>
EXHIBIT 3
TERMS OF THE
AGREEMENT AND PLAN OF MERGER
The Agreement and Plan of Merger, dated as of February 27, 1995,
by and between First Commerce Corporation and Lakeside
Bancshares, Inc. (the "Agreement") contains several provisions.
The following are key provisions of the Agreement:
In exchange for the 500,000 shares of Lakeside common stock
outstanding, Lakeside shareholders will receive newly issued
shares of FCOM common stock.
The parties intend for the merger to qualify as a tax-free
"reorganization" under the Internal Revenue Code. Thus, the
merger and resulting exchange of Lakeside stock for FCOM
stock constitute a tax-free exchange for Federal income tax
purposes. The exchange of cash for fractional shares may
have tax consequences.
Under the Agreement, the exchange ratio will be based upon
the result of $30,000,000, less a deductible amount (see
below), divided by the average of the closing prices of FCOM
common stock on the twenty trading days immediately prior to
the fifth calendar day preceding the effective date of the
transaction (the "average price"). The stated purchase price
is to be reduced by the excess over $200,000 of: (1)
investment banking expenses in excess of $85,000; and (2)
fees and expenses related to the merger with FCOM, which were
incurred subsequent to December 6, 1994. Based upon
discussions with Lakeside's legal counsel, the amount of this
purchase price reduction is expected to be immaterial.
No fractional shares will be issued by FCOM. Lakeside
shareholders who would otherwise have been entitled to
fractional shares (after aggregating all shares owned) will
be paid in cash based upon the average price of FCOM stock as
defined above.
The Agreement may be terminated by mutual consent of the
Board of Directors of each institution or by either party's
Board of Directors if the merger is not approved by its
shareholders.
The exchange ratio will be adjusted to reflect any
reclassification, recapitalization, split-up, combination or
exchange of shares, or stock dividend which might occur at
FCOM subsequent to the date of the Agreement but prior to the
consummation of the merger.
Based upon the terms of the Agreement, Lakeside shareholders
would receive 2.30769 shares of FCOM stock (fractional shares
paid in cash) if the average price of FCOM stock (as defined
above) is equal to the recent price of $26.00 per share.
<PAGE>
EXHIBIT 4
EXPECTED IMPACT OF THE MERGER
ON THE SHAREHOLDERS OF LAKESIDE BANCSHARES, INC.
The following is a summary of the various analyses undertaken in
conjunction with this fairness opinion. This summary is not
intended to represent all analyses performed by Southard
Financial, but is presented here for the convenience of Lakeside
and its shareholders.
The price of FCOM common stock was in the range of $26.00 during
February and March 1995. Assuming this price as the average
price to be used in the merger, Lakeside shareholders would
receive 2.30769 equivalent shares of FCOM stock for each share of
Lakeside stock exchanged under the Agreement.
Earnings Lakeside earned $3.12 per share in 1994. FCOM earned
$2.19 per share (fully diluted) in 1994. Had the
merger been consummated prior to January 1, 1994,
each former Lakeside share would have earned $5.05 in
1994 (FCOM 1994 diluted earnings of $2.19 per share
times 2.30769 equivalent shares). This represents an
increase of 62% over what Lakeside earned in 1994.
Based upon the analysts surveyed, FCOM's core
earnings are expected to be approximately $3.35 per
share in 1995. Lakeside is budgeted to earn $3.50
per share in 1995 (budgeted bank earnings, net of
estimated parent company expenses). Given these
estimates, and assuming that the merger was
consummated prior to January 1, 1995, Lakeside
shareholders would see an increase of about 121% over
what Lakeside would be expected to earn in 1995,
absent the merger.
Dividends Each share of Lakeside stock received $1.10 per share
in dividends in 1994. Had the merger been
consummated prior to January 1, 1994, each former
share of Lakeside stock would have received dividends
of $2.54 in 1994 (FCOM 1994 dividends of $1.10 per
share times 2.30769 equivalent shares). This
represents an increase of 131% over the dividends
paid to Lakeside shareholders in 1994. Based upon
indicated FCOM dividends of $1.20 per share in 1995
and anticipated Lakeside dividends of $1.10 per
share, the merger would provide Lakeside shareholders
with a 152% increase in projected dividends.
Book Value Reported book value of Lakeside was $33.60 per share
at December 31, 1994, while reported book value of
FCOM at December 31, 1994 was $15.71 per share. Had
the merger been consummated prior to December 31,
1994, each former Lakeside share would have book
value of $36.25 (FCOM December 31, 1994 book value of
$15.71 per share times 2.30769 equivalent shares).
The resulting book value of the investment in a
Lakeside share would be increased by 8%.
Liquidity Unlike Lakeside stock, FCOM shares are actively
traded on the NASDAQ market. Average daily trading
volume was about 80,000 shares from mid-June to mid-
July, 1994. Further, except in the case of officers
and directors of Lakeside, FCOM shares received will
be freely tradeable with no restrictions.
<PAGE>
EXHIBIT 5
COMPARISON OF THE MERGER PRICING
TO PUBLIC MARKET TRANSACTIONS
Southard Financial compared the pricing terms of the Agreement to
the pricing of recent acquisitions of banks and bank holding
companies across the United States, and to the minority interest
prices of publicly traded banks and bank holding companies in the
Southeast. Pricing data for recent acquisitions of banks and
bank holding companies is summarized as follows:
<TABLE>
<CAPTION>
Price/ Price/ Price/ Equity/
Transactions Announced in 1994<FN1> Earnings Book Val Assets ROAA Assets ROAE
-------------------------------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Nationwide (207)<FN2> 16.5x 174.1% 15.6% 1.12% 9.16% 12.61%
LA, TX, MS, AR (52)<FN3> 13.5x 175.0% 15.8% 1.35% 9.10% 15.49%
Louisiana (21) 14.1x 203.9% 18.1% 1.40% 9.18% 16.12%
Lakeside 19.2x 178.6% 16.9% 0.85% 9.49% 9.53%
</TABLE>
<FN1> Insufficient information existed regarding transactions
announced in 1995 to-date.
<FN2> Excluding 22 transactions with acquiree assets over $500
million.
<FN3> Excluding three transactions with acquiree assets over $500
million:
Worthen Banking Corp. (AR); TCBankshares (AR); and Grenada
Sunburst (MS)
Based upon a purchase price of $30 million, the merger of
Lakeside into FCOM will take place at 19.23x 1994 Lakeside
earnings, 17.14x budgeted 1995 earnings, or above the range of
recent market price/earnings multiples, and 179% of December 31,
1994 book value, or within the range of recent market price/book
value multiples.
In determining the attractiveness of owning FCOM stock, it is
important to examine FCOM's recent pricing in comparison with
recent pricing multiples for publicly traded banks and bank
holding companies. This pricing data is presented below as of
December 31, 1994.
<TABLE>
<CAPTION>
Price/ Price/ Current Current
Publicly Traded Banks<FN1> Earnings Book Val ROAE Yield
-------------------------- -------- -------- ------- --------
<S> <C> <C> <C> <C>
All Banks (200) 10.76x 140% 13.4% 2.99%
LA, TX, MS, AR Banks (16) 9.76x 147% 15.1% 3.07%
Louisiana Banks (2) 8.88x 143% 16.3% 3.83%
Texas Banks (3) 10.01x 143% 14.4% 1.92%
Mississippi Banks (6) 10.13x 146% 14.5% 3.29%
Arkansas Banks (5) 9.53x 153% 15.7% 3.18%
FCOM 11.87x 165% 13.5% 4.23%
</TABLE>
<FN1> Subject to certain screens performed by Southard
Financial
Based upon an analysis of the data provided above, FCOM's
price/earnings multiple, price/book value ratio, and current
dividend yield are all above those of other publicly traded banks
in its region, while its ROAE is below the range. FCOM's
earnings in 1994 were adversely impacted by securities
transactions that amounted to about $0.90 per share. Thus, on an
ongoing basis, the price/earnings ratio for FCOM was
approximately 8.5x. FCOM is expected to incur some securities
losses during 1995 also, but with core earnings of approximately
$3.35 per share.
EXHIBIT 6
OVERVIEW OF LAKESIDE BANCSHARES, INC.
Lakeside Bancshares, Inc. is a one-bank holding company whose
primary asset is 100% of the common stock of Lakeside National
Bank of Lake Charles, Louisiana (the "Bank"). The Bank, which
was opened in 1959, serves the Lake Charles area with six full
service branches, one drive-up facility, and one stand-alone ATM.
The Bank had consolidated assets of about $177 million at
December 31, 1994, and equity of 9.9% of assets. The Bank earned
$1.34 million (0.68% of average assets) in 1992, $1.49 million
(0.79%) in 1993, and $1.56 million (0.85%) in 1994. Earnings are
budgeted to reach $1.92 million in 1995, for an ROAA of about
1.13%. The Lake Charles market is currently being impacted by:
(1) the development of gambling casinos on the lake; (2) the
continued conversion of Chenalt Air Force Base for commercial
aircraft retro-fitting; (3) the resurgence of capital spending in
the local petrochemical industry; and, (4) the resulting increase
in employment and residential housing construction. Further
details on Lakeside and the Bank are documented in Southard
Financial's file.
EXHIBIT 7
OVERVIEW OF FIRST COMMERCE CORPORATION
First Commerce Corporation (FCOM) is a regional multi-bank
holding company with total consolidated assets of $6.56 billion
at December 31, 1994. Through its five wholly-owned banks in
Louisiana (New Orleans, Baton Rouge, Lafayette, Alexandria, and
Lake Charles) and its seven banking related subsidiaries, FCOM
offers complete banking and related financial services to
commercial and consumer customers in the Gulf South, primarily
Louisiana and southern Mississippi. FCOM operates with nearly
3,500 employees in over 108 banking offices.
Four of FCOM's five banking subsidiaries were acquired in 1984.
FCOM's latest acquisitions were of First Acadiana National
Bancshares, Inc. in January 1994 (whose bank subsidiary merged
into FCOM's bank subsidiary in Lafayette), First Bancshares,
Inc. in February 1995 (whose bank subsidiary merged into FCOM's
bank subsidiary in New Orleans) and City Bancorp, Inc. in
February 1995 (whose bank subsidiary merged into FCOM's bank
subsidiary in Lafayette). Management is interested in acquiring
other banks with good market share and/or earnings potential.
Fully diluted earnings per share increased rapidly since 1991.
FCOM earned $3.18 per share (1.43% of average assets) in 1993, up
17.8% from $2.70 per share (1.19%) in 1992, which was up 73.0%
from $1.56 per share in 1991. FCOM earned $2.19 per share (fully
diluted) in 1994, or 0.99% of average assets. The analyst's
earnings estimates for 1995 range are $3.35 per share. Common
dividends of $0.85 per share in 1993 were 21.4% above 1992
dividends of $0.70 per share. Per share dividends were $1.10 in
1994, up 29.4% from 1993. According to management, the dividend
has never been reduced.
FCOM had common equity to total assets of 7.18% at December 31,
1994, up from 5.01% at year-end 1991. FCOM's net charge-offs
decreased from $30.72 million (1.32% of average loans) in 1991 to
$3.08 million (0.11%) in 1994. Also, non-accrual loans declined
from $56.55 million at year-end 1991 to $13.40 million at
December 31, 1994. FCOM has a high percentage of non-interest
bearing deposits, relative to industry norms, which has a
positive impact on profit margins.
As noted above, all information on FCOM was obtained from analyst
reports and from limited information provided by FCOM's
management. Further details on FCOM are contained in Southard
Financial's file.
EXHIBIT 8
QUALIFICATIONS OF SOUTHARD FINANCIAL
<PAGE>
AN OVERVIEW OF SOUTHARD FINANCIAL
BACKGROUND . Founded in 1987.
. Principals have combined business valuation
experience of approximately twenty years.
. Serves clients throughout the United States,
with concentration in the Southeast.
. Broad industry experience.
. Services provided for public and closely-held
companies.
. Provides valuation services for over 100
ESOPs, making Southard Financial one of the
largest ESOP appraisers in the United States.
PROFESSIONAL
CREDENTIALS . Southard Financial's principals,
Douglas K. Southard and David A. Harris, are
senior members of the American Society of
Appraisers (ASA).
. Both principals of Southard Financial are
Chartered Financial Analysts (CFA).
. Both principals are current or former
officers of the West Tennessee Chapter of the
ASA.
EDUCATIONAL
CREDENTIALS . Douglas Southard holds Doctor of
Business Administration and Master of Business
Administration degrees from Indiana University,
with concentrations in finance, economics, and
quantitative analysis.
. David Harris holds the Master of Business
Administration degree from Memphis State
University, with concentrations in finance
and business investments.
BUSINESS
ETHICS . Southard Financial and its principals adhere
to the ethical standards of the Institute of
Chartered Financial Analysts and the American
Society of Appraisers.
. All reports conform to the Uniform Standards
of Professional Appraisal Practice.
. Southard Financial is committed to providing
unbiased opinions to be used for decision
making.
. Fees for valuation services are not
contingent upon the conclusion of value or the
completion of a transaction.
<PAGE>
BIOSKETCH
DOUGLAS K. SOUTHARD, DBA, CFA, ASA
EDUCATIONAL AND PROFESSIONAL CREDENTIALS
Doctor of Business Administration, 1981, Indiana University
Master of Business Administration, 1976, Indiana University
Bachelor of Arts, 1975, Rhodes College (formerly
Southwestern at Memphis)
Chartered Financial Analyst, 1987, Institute of Chartered
Financial Analysts (now part of the Association for
Investment Management and Research)
Senior Member, 1987, American Society of Appraisers,
Business Valuation
PROFESSIONAL BACKGROUND
Founder and Principal, Southard Financial, Memphis TN
Partner, Mercer Capital Management, Inc., Memphis TN (1984-87)
Consulting Associate, Mercer Capital Management, Inc.,
Memphis TN (1983-84)
Principal, Douglas K. Southard, Financial Consultant,
Memphis TN (1982-83)
ACADEMIC POSITIONS HELD
Assistant Professor of Finance, Rhodes College, Memphis TN
Assistant Professor of Finance, Virginia Polytechnic
Institute & State Univ., Blacksburg VA
Lecture in Finance, Indiana University, Bloomington IN
RELATED EXPERIENCE
Frequent Speaker, professional organizations, business
valuation topics Expert Witness, business valuation, local,
state and federal courts
Board of Directors, Management Computing Solutions, Inc.,
Memphis TN
Board of Directors, Columbian Rope Company, Auburn NY
Advisory Board, MicroAge, Memphis TN
Former Officer, West Tennessee Chapter, American Society of
Appraisers
PUBLICATIONS
"Using the Capital Asset Pricing Model to Determine
Capitalization Rates: Adjusting for Differences in Financial
Structure, with Severin C. Carlson, Business Valuation Review,
June 1991
"Business Valuation Can Serve in Lifetime Planning, with
Z.C. Mercer, Memphis Business Journal, April 1-5, 1985
"Valuation Process Holds Keys to Executive Wealth," with
Z.C. Mercer, Memphis Business Journal, March 25-29, 1985
"What IRA's Are Worth," with Z.C. Mercer, The Southern
Banker, June 1984
<PAGE>
BIOSKETCH
DAVID A. HARRIS, CFA, ASA
EDUCATIONAL AND PROFESSIONAL CREDENTIALS
Master of Business Administration, 1982, Memphis State
University
Bachelor of Arts, 1979, Colorado State University
Senior Member, 1990, American Society of Appraisers,
Business Valuation
Chartered Financial Analyst, 1989, Institute of Chartered
Financial Analysts (now part of the Association for
Investment Management and Research)
PROFESSIONAL BACKGROUND
Principal, Southard Financial, Memphis TN
Associate, Mercer Capital Management, Inc., Memphis TN
(1985-90)
Financial Analyst, Methodist Hospitals of Memphis, Inc.
(1983-85)
Cost Analyst, Schering-Plough, Inc., Memphis TN (1982-83)
PROFESSIONAL/COMMUNITY SERVICE
President, West Tennessee Chapter, American Society of
Appraisers (1994-95)
Vice President, West Tennessee Chapter, American Society of
Appraisers (1993-94)
Board of Directors, Solomon Schechter Day School of Memphis,
Inc. (1993-94)
President, West Tennessee Chapter, American Society of
Appraisers (1990-91)
Vice President, Sea Isle Park Neighborhood Association,
Memphis TN (1992-95)
Board of Directors, Sea Isle Park Neighborhood Association,
Memphis TN (1990-95)
Business Liaison, Junior Achievement of Memphis TN (1984-85)
RELATED EXPERIENCE
Expert Witness, business valuation
Co-Author, "The Perils of Excess," with Z. C. Mercer, ABA
Banking Journal, October 1987
<PAGE>
APPENDIX C
EXCERPT FROM SECTION 131 OF THE
LOUISIANA BUSINESS CORPORATION LAW
<PAGE>
APPENDIX C
EXCERPT FROM SECTION 131 OF
THE LOUISIANA BUSINESS CORPORATION LAW
C. [A]ny shareholder electing to exercise such right of
dissent shall file with the corporation, prior to or at the
meeting of shareholders at which such proposed corporate action
is submitted to a vote, a written objection to such proposed
corporate action, and shall vote his shares against such action.
If such proposed corporate action be taken by the required vote,
but by less than eighty percent of the total voting power, and
the merger, consolidation or sale, lease or exchange of assets
authorized thereby be effected, the corporation shall promptly
thereafter give written notice thereof, by registered mail, to
each shareholder who filed such written objection to, and voted
his shares against, such action, at such shareholder's last
address on the corporation's records. Each such shareholder may,
within twenty days after the mailing of such notice to him, but
not thereafter, file with the corporation a demand in writing for
the fair cash value of his shares as of the day before such vote
was taken; provided that he state in such demand the value
demanded, and a post office address to which the reply of the
corporation may be sent, and at the same time deposit in escrow
in a chartered bank or trust company located in the parish of the
registered office of the corporation, the certificates
representing his shares, duly endorsed and transferred to the
corporation upon the sole condition that said certificates shall
be delivered to the corporation upon payment of the value of the
shares determined in accordance with the provisions of this
section. With his demand the shareholder shall deliver to the
corporation, the written acknowledgment of such bank or trust
company that it so holds his certificates of stock. Unless the
objection, demand and acknowledgment aforesaid be made and
delivered by the shareholder within the period above limited, he
shall conclusively be presumed to have acquiesced in the
corporate action proposed or taken....
D. If the corporation does not agree to the value so
stated and demanded, or does not agree that a payment is due, it
shall, within twenty days after receipt of such demand and
acknowledgment, notify in writing the shareholder, at the
designated post office address, of its disagreement, and shall
state in such notice the value it will agree to pay if any
payment should be held to be due; otherwise it shall be liable
for, and shall pay to the dissatisfied shareholder, the value
demanded by him for his shares.
E. In case of disagreement as to such fair cash value,
or as to whether any payment is due, after compliance by the
parties with the provisions of subsections C and D of this
section, the dissatisfied shareholder, within sixty days after
receipt of notice in writing of the corporation's disagreement,
but not thereafter, may file suit against the corporation, or the
merged or consolidated corporation, as the case may be, in the
district court of the parish in which the corporation or the
merged or consolidated corporation, as the case may be, has its
registered office, praying the court to fix and decree the fair
cash value of the dissatisfied shareholder's shares as of the day
before such corporate action complained of was taken, and the
court shall, on such evidence as may be adduced in relation
thereto, determine summarily whether any payment is due, and, if
so, such cash value, and render judgment accordingly. Any
shareholder entitled to file such suit may, within such sixty-day
period but not thereafter, intervene as a plaintiff in such suit
filed by another shareholder, and recover therein judgment
against the corporation for the fair cash value of his shares.
No order or decree shall be made by the court staying the
proposed corporate action, and any such corporate action may be
carried to completion notwithstanding any such suit. Failure of
the shareholder to bring suit, or to intervene in such a suit,
within sixty days after receipt of notice of disagreement by the
corporation shall conclusively bind the shareholder (1) by the
corporation's statement that no payment is due, or (2) if the
corporation does not contend that no payment is due, to accept
the value of his shares as fixed by the corporation in its notice
of disagreement.
F. When the fair value of the shares has been agreed
upon between the shareholder and the corporation, or when the
corporation has become liable for the value demanded by the
shareholder because of failure to give notice of disagreement and
of the value it will pay, or when the shareholder has become
bound to accept the value the corporation agrees is due because
of his failure to bring suit within sixty days after receipt of
notice of the corporation's disagreement, the action of the
shareholder to recover such value must be brought within five
years from the date the value was agreed upon, or the liability
of the corporation became fixed.
G. If the corporation or the merged or consolidated
corporation, as the case may be, shall, in its notice of
disagreement, have offered to pay the dissatisfied shareholder on
demand an amount in cash deemed by it to be the fair cash value
of his shares, and if, on the institution of a suit by the
dissatisfied shareholder claiming an amount in excess of the
amount so offered, the corporation, or the merged or consolidated
corporation, as the case may be, shall deposit in the registry of
the court, there to remain until the final determination of the
cause, the amount so offered, then, if the amount finally awarded
such shareholder, exclusive of interest and costs, be more than
the amount offered and deposited as aforesaid, the costs of the
proceeding shall be taxed against the corporation, or the merged
or consolidated corporation, as the case may be; otherwise the
costs of the proceeding shall be taxed against such shareholder.
H. Upon filing a demand for the value of his shares, the
shareholder shall cease to have any of the rights of a
shareholder except the rights accorded by this section. Such a
demand may be withdrawn by the shareholder at any time before the
corporation gives notice of disagreement, as provided in
subsection D of this section. After such notice of disagreement
is given, withdrawal of a notice of election shall require the
written consent of the corporation. If a notice of election is
withdrawn, or the proposed corporate action is abandoned or
rescinded, or a court shall determine that the shareholder is not
entitled to receive payment for his shares, or the shareholder
shall otherwise lose his dissenter's rights, he shall not have
the right to receive payment for his shares, his share
certificates shall be returned to him (and, on his request, new
certificates shall be issued to him in exchange for the old ones
endorsed to the corporation), and he shall be reinstated to all
his rights as a shareholder as of the filing of his demand for
value, including any intervening preemptive rights, and the right
to payment of any intervening dividend or other distribution, or,
if any such rights have expired or any such dividend or
distribution other than in cash has been completed, in lieu
thereof, at the election of the corporation, the fair value
thereof in cash as determined by the board as of the time of such
expiration or completion, but without prejudice otherwise to any
corporate proceedings that may have been taken in the interim.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers
Section 83 of the Louisiana Business Corporation Law
provides in part that a corporation may indemnify any director,
officer, employee or agent of the corporation against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection
with any action, suit or proceeding to which he is or was a party
or is threatened to be made a party (including any action by or
in the right of the corporation) if such action arises out of the
fact that he is or was a director, officer, employee or agent of
the corporation and he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best
interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
The indemnification provisions of the Louisiana Business
Corporation Law are not exclusive; however, no corporation may
indemnify any person for willful or intentional misconduct. A
corporation has the power to obtain and maintain insurance, or to
create a form of self-insurance on behalf of any person who is or
was acting for the corporation, regardless of whether the
corporation has the legal authority to indemnify the insured
person against such liability.
Section 11 of FCC's by-laws (the "Indemnification By-Law")
provides for mandatory indemnification for directors and officers
or former directors and officers of FCC to the full extent
permitted by Louisiana law. The right to indemnification
provided by the Indemnification By-law applies to all covered
claims, whether such claims arose before or after the date the
Indemnification By-law was adopted.
As permitted by FCC's Articles of Incorporation, FCC has
entered into contracts with its directors and officers providing
for indemnification to the fullest extent permitted by law
("Indemnification Contracts"). The rights of the directors and
officers under the Indemnification Contracts substantially mirror
those granted under the Indemnification By-law.
FCC maintains an insurance policy covering the liability of
its directors and officers for actions taken in their official
capacity.
The Indemnification Contracts provide that, to the extent
insurance is reasonably available, FCC will maintain comparable
insurance coverage for each contracting party as long as he or
she serves as an officer or director and thereafter for so long
as he or she is subject to possible personal liability for
actions taken in such capacities. The Indemnification Contracts
also provide that if FCC does not maintain comparable insurance,
it will hold harmless and indemnify a contracting party to the
full extent of the coverage that would otherwise have been
provided for his or her benefit.
Item 21. Exhibits and Financial Statement Schedules
a) Exhibits
The following Exhibits are filed as part of this
Registration Statement:
Exhibit No. Description
2 Agreement and Plan of Merger dated February 27, 1995
included in the Registration Statement as Appendix A.
4.1 Indenture between First Commerce Corporation and
Republic Bank Dallas, N.A. (now NationsBank Texas,
N.A.), Trustee, including the form of 12 3/4%
Convertible Debenture due 2000, Series A included as
Exhibit 4.1 to First Commerce Corporation's Annual
Report on Form 10-K for the year ended December 31,
1985 and incorporated herein by reference.
4.2 Indenture between First Commerce Corporation and
Republic Bank Dallas, N.A. (now NationsBank Texas,
N.A.), Trustee, including the form of 12 3/4%
Convertible Debenture due 2000, Series B included as
Exhibit 4.2 to First Commerce Corporation's Annual
Report on Form 10-K for the year ended December 31,
1985 and incorporated herein by reference.
5 Opinion of Correro, Fishman & Casteix, L.L.P.
8 Form of opinion of Arthur Andersen LLP as to certain
tax matters.
15 Letter of Arthur Andersen LLP regarding unaudited
interim financial information.*
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Gragson, Casiday & Guillory.
23.3 Consent of Correro, Fishman & Casteix, L.L.P.,
included in Exhibit 5.
24 Powers of Attorney of directors of First Commerce
Corporation contained on page S-1 of the registration
statement.
99 Form of Proxy of Lakeside Bancshares, Inc.
_________________
*Previously filed or no longer required.
b) Financial Statement Schedules
None
Item 22. Undertakings
The undersigned Registrant hereby undertakes as follows:
(1) To respond to requests for information that is
incorporated by reference into the Prospectus pursuant to
Items 4, 10(b), 11, or 13 of Form S-4, within one business
day of receipt of such request, and to send the
incorporated documents by first class mail or other equally
prompt means. This includes information contained in
documents filed subsequent to the effective date of the
Registration Statement through the date of responding to
the request.
(2) To supply by means of a post-effective
amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the
subject of and included in the Registration Statement when
it became effective.
(3) That for purposes of determining any liability
under the Securities Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act")
(and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new
registration statement related to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering
thereof.
(4) That prior to any public reoffering of the
securities registered hereunder through use of a prospectus
which is a part of this registration statement, by any
person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such
reoffering prospectus will contain the information called
for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other Items
of the applicable form.
(5) That every prospectus (i) that is filed
pursuant to paragraph (4) immediately preceding, or (ii)
that purports to meet the requirements of Section 10(a)(3)
of the Securities Act and is used in connection with an
offering of securities subject to Rule 415, will be filed
as a part of an amendment to the registration statement and
will not be used until such amendment is effective, and
that, for purposes of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(6) Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to
directors, officers and controlling persons of the
Registrant, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection
with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the
Registrant has duly caused this Post-Effective Amendment No. 1 to
its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of New
Orleans, State of Louisiana on the 27 day of April, 1995.
FIRST COMMERCE CORPORATION
By: /s/ Thomas L. Callicutt, Jr.
____________________________
Thomas L. Callicutt, Jr.
Senior Vice President,
Controller and Principal
Accounting Officer
Pursuant to the requirements of the Securities Act, this
Post-Effective Amendment No. 1 to the Registration Statement has
been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
IAN ARNOF* President and Chief April 27, 1995
Ian Arnof Executive Officer and
Director
HERMANN MOYSE, JR.* Chairman of the Board April 27, 1995
Hermann Moyse, Jr.
/s/ Thomas C. Jaeger Executive Vice President April 27, 1995
Thomas C. Jaeger and Chief Financial
Officer
/s/ Thomas L. Callicutt, Jr. Senior Vice President, April 27, 1995
Thomas L. Callicutt, Jr. Controller and Principal
Accounting Officer
Director April ___, 1995
James J. Bailey III
JOHN W. BARTON* Director April 27, 1995
John W. Barton
Director April ___, 1995
Sydney J. Bestoff III
ROBERT H. BOLTON* Director April 27, 1995
Robert H. Bolton
FRANCES B. DAVIS* Director April 27, 1995
Frances B. Davis
LAURANCE EUSTIS, JR.* Director April 27, 1995
Laurance Eustis, Jr.
WILLIAM P. FULLER* Director April 27, 1995
William P. Fuller
ARTHUR HOLLINS III* Director April 27, 1995
Arthur Hollins III
F. BEN JAMES, JR.* Director April 27, 1995
F. Ben James, Jr.
ERIK F. JOHNSEN* Director April 27, 1995
Erik F. Johnsen
JOSEPH MERRICK JONES, JR.* Director April 27, 1995
Joseph Merrick Jones, Jr.
Director April ___, 1995
Edwin Lupberger
O. MILES POLLARD, JR.* Director April 27, 1995
O. Miles Pollard, Jr.
G. FRANK PURVIS, JR.* Director April 27, 1995
G. Frank Purvis, Jr.
EDWARD M. SIMMONS* Director April 27, 1995
Edward M. Simmons
H. LEIGHTON STEWARD* Director April 27, 1995
H. Leighton Steward
JOSEPH B. STOREY* Director April 27, 1995
Joseph B. Storey
ROBERT A. WEIGLE* Director April 27, 1995
Robert A. Weigle
*By: /s/ Thomas L. Callicutt, Jr. April 27, 1995
Thomas L. Callicutt, Jr.
Attorney-in-fact
</TABLE>
<PAGE>
EXHIBIT INDEX
Sequentially
Numbered
Exhibits Pages
2 Agreement and Plan of Merger dated February 27, 1995
included in the Registration Statement as Appendix
A.
4.1 Indenture between First Commerce Corporation and
Republic Bank Dallas, N.A. (now NationsBank Texas,
N.A.), Trustee, including the form of 12 3/4%
Convertible Debenture due 2000, Series A included as
Exhibit 4.1 to First Commerce Corporation's Annual
Report on Form 10-K for the year ended December 31,
1985 and incorporated herein by reference.
4.2 Indenture between First Commerce Corporation and
Republic Bank Dallas, N.A. (now NationsBank Texas,
N.A.), Trustee, including the form of 12 3/4%
Convertible Debenture due 2000, Series B included as
Exhibit 4.2 to First Commerce Corporation's Annual
Report on Form 10-K for the year ended December 31,
1985 and incorporated herein by reference.
5 Opinion of Correro, Fishman & Casteix, L.L.P.
8 Form of opinion of Arthur Andersen LLP as to certain
tax matters.
15 Letter of Arthur Andersen LLP regarding unaudited
interim financial information.*
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Gragson, Casiday & Guillory.
23.3 Consent of Correro, Fishman & Casteix, L.L.P.
included in Exhibit 5.
24 Powers of Attorney of directors of First Commerce
Corporation contained on page S-1 of the
registration statement.*
99 Form of Proxy of Lakeside Bancshares, Inc.
_________________
*Previously filed or no longer required.
EXHIBIT 5
[CORRERO, FISHMAN & CASTEIX, L.L.P. LETTERHEAD]
April 27, 1995
First Commerce Corporation
210 Baronne Street
New Orleans, LA 70112
Gentlemen:
We have acted as counsel for First Commerce Corporation, a
Louisiana corporation (the "Company"), in connection with the
Company's Post-Effective Amendment No. 1 to its Registration
Statement on Form S-4 (the "Amendment") covering up to 1,540,000
shares of common stock (the "Common Stock") of the Company (the
"Shares") which the Company proposes to issue to shareholders of
Lakeside Bancshares, Inc. in accordance with the Agreement and
Plan of Merger (the "Plan") described in the Amendment.
For the purposes of the opinions expressed below, we have
examined the Amendment, the Plan, the Articles of Incorporation,
as amended, and By-laws, as amended, of the Company, resolutions
adopted by the Board of Directors and Executive Committee of the
Company and such other documents and sources of law as we
considered necessary.
On the basis of the foregoing, we are of the opinion that
the proposed issuance of the Shares has been duly authorized by
all necessary corporate action, and the Shares will, when issued
in accordance with the terms of the Plan, be validly issued,
fully paid and non-assessable.
We hereby consent (i) to be named in the Amendment under
the heading "Legal Matters" as counsel for the Company and (ii)
to the filing of this opinion as an Exhibit to the Amendment. In
so doing we do not admit that we are "experts" within the meaning
of the Securities Act of 1933.
Yours sincerely,
Anthony J. Correro, III
EXHIBIT 8
___, 1995
D R A F T
BY HAND
Mr. Leon K. Poche, Jr.
First Commerce Corporation
210 Baronne Street
New Orleans, Louisiana 70112
Dear Mr. Poche:
This opinion is being furnished to you in connection with the
proposed acquisition of Lakeside Bancshares, Inc. ("Holding") and
its wholly owned banking subsidiary, Lakeside National Bank of
Lake Charles ("Bank") by First Commerce Corporation ("FCC"),
which is expected to be completed on ___, 1995 ("the Effective
Date"). You have requested our opinion concerning the following:
. Whether the merger of Holding into FCC will qualify as a
reorganization under Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended ("the Code").
. That the exchange of Holding common stock to the extent
exchanged for FCC common stock will not give rise to gain or
loss for federal income tax purposes to the holders of
Holding common stock with respect to such exchange.
. Whether the merger of Bank into First National Bank of Lake
Charles ("FNBLC"), a wholly-owned banking subsidiary of FCC,
will qualify as a reorganization under Section 368(a)(1)(A)
of the Code.
You have asked for our opinion on the federal income tax
consequences to FCC, Holding, Bank, FNBLC and the stockholders of
Holding. We have not considered any nonincome tax, state, local
or foreign income tax consequences, and, therefore, do not
express any opinion regarding the treatment that would be given
the merger by the applicable authorities on any nonincome tax or
any state, local or foreign tax issues. We also express no
opinion on nontax issues, such as corporate law or securities law
matters, including, but not limited to, all securities law
disclosure requirements.
In rendering our opinion, we have relied upon the accuracy and
completeness of the facts and information as contained in the
Agreement and Plan of Merger dated February 27, 1995 ("the
Agreement"), including all exhibits attached thereto, and the
representations included below. To the extent there are any
changes to the Agreement or representations, our opinion may be
affected accordingly.
The discussion and conclusions set forth below are based upon the
Code, the Treasury Regulations, and existing administrative and
judicial interpretations thereof, as of the Effective Date, all
of which are subject to change. All section references are to
the Internal Revenue Code of 1986, as amended, unless otherwise
stated. If there is a change in the Code, the Treasury
Regulations or public rulings thereunder, the current Internal
Revenue Service rulings or releases, or in the prevailing
judicial interpretation of the foregoing, the opinion expressed
herein would necessarily have to be re-evaluated in light of any
such changes. We have no responsibility to update this opinion
for events, transactions, changes in the above-listed law and
authority or circumstances occurring after the Effective Date.
This opinion is solely for the benefit of Holding and FCC and is
not intended to be relied upon by anyone other than Holding and
FCC. Although you do hereby have our express consent to inform
Bank, FNBLC, and Holding common stockholders of our opinion by
including copies of this letter as an exhibit to the Agreement
and as an exhibit in the Registration Statement on Form S-4 for
the proposed transactions, we assume no responsibility for tax
consequences to them. Instead, each of these parties must
consult and rely upon the advice of his/her counsel, accountant
or other advisor. Except to the extent expressly permitted
hereby, and without the prior written consent of this firm, this
letter may not be quoted in whole or in part or otherwise
referred to in any documents or delivered to any other person or
entity.
Proposed Transaction
Our understanding of the proposed transactions, as described in
the Agreement, is as follows:
A. Holding will be merged with and into FCC under the Articles
of Incorporation of FCC, pursuant to Louisiana Business
Corporation Law.
B. Immediately following the merger of Holding into FCC, and as
part of the same overall transaction, Bank will be merged
with and into FNBLC pursuant to Federal law (12 U.S.C.
Section 215a). No additional shares of FNBLC or FCC will be
issued as a result of this transaction.
C. The common stockholders of Holding will receive shares of
FCC common stock proportionate in value, based on the terms
contained in Section 4 of Exhibit A of the Agreement. In
lieu of issuing fractional shares of FCC common stock as a
result of the merger, common stockholders of Holding will be
entitled to receive a cash payment equal to such fractional
share multiplied by the designated value of a share of FCC
common stock.
Unless stockholders of Holding common stock holding at least
eighty (80) percent of the voting rights of Holding approve the
plan of reorganization, objecting stockholders of Holding may
dissent from the merger involving Holding and FCC, and instead
receive cash in exchange for their shares of Holding common
stock, based on the fair market value of such stock determined
under Section 131 of the Louisiana Business Corporation Law (La.
R.S. Section 12:131).
FCC has publicly announced the authorization by its board of
directors of the repurchase of up to two million shares of its
common stock on the open market (the "Buyback Program"). The
stock to be repurchased will be widely held.
Additional Representations
In addition to the representations included in the Agreement, the
following representations have been made to us by representatives
of FCC, FNBLC, Holding, and Bank:
a) FCC and the stockholders of Holding will pay their
respective expenses, if any, incurred in connection with the
successful consummation of the transaction.
b) There is no intercorporate indebtedness existing between
Holding and FCC, or between FNBLC and Bank, that was issued,
acquired, or will be settled at a discount.
c) The fair market value of the assets of Holding transferred
to FCC will equal or exceed the sum of the liabilities
assumed by FCC plus the amount of liabilities, if any, to
which the transferred assets are subject.
d) The fair market value of the assets of Bank transferred to
FNBLC will equal or exceed the sum of the liabilities
assumed by FNBLC plus the amount of liabilities, if any, to
which the transferred assets are subject.
e) None of the compensation received by any stockholder-
employees of Holding or Bank will be separate consideration
for, or allocable to, any of their shares of Holding common
stock; none of the shares of FCC common stock received by
any stockholder-employees will be separate consideration
for, or allocable to, any employment agreement; and the
compensation paid to any stockholder-employees will be for
services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arm's length for
similar services.
f) Holding will be merged with and into FCC under the Articles
of Incorporation of FCC, pursuant to Louisiana Business
Corporation Law.
g) Bank will be merged with and into FNBLC pursuant to Federal
law (12 U.S.C. Section 215a).
h) The Holding common stockholders will have unrestricted
rights of ownership of FCC common stock received in the
transaction, and their ability to retain the FCC common
stock received in the transaction will not be limited in any
way.
i) The ratio for the exchange of shares of Holding common stock
for FCC common stock in the transaction was negotiated
through arm's length bargaining. Accordingly, the fair
market value of the FCC common stock to be received by
Holding common stockholders in the transaction will be
approximately equal to the fair market value of the Holding
common stock surrendered by such stockholders in exchange
therefor.
The following representations have been made to us by
representatives of FCC and FNBLC:
a) FCC has no plan or intention to re-acquire any of its stock
issued in the transaction other than potential open market
transactions relating to the Buyback Program. Prior to
consummation of the transaction, and subsequent to the
announcement by FCC of the Buyback Program, FCC will have
obtained written representations from shareholders of
Holding owning in the aggregate at least (50) fifty percent
of the outstanding common stock of Holding, that they have
no plan or intention to sell, exchange, or otherwise dispose
of any FCC common stock to be received in the transaction.
b) FCC and FNBLC have no plan or intention to sell or otherwise
dispose of the stock of Bank or any of the assets of Holding
acquired in the transactions, except for dispositions made
in the ordinary course of business or transfers described in
Section 368(a)(2)(C) of the Code. Additionally, FCC and
FNBLC have no plan or intention to sell or otherwise dispose
of any of the assets of Bank acquired in the transactions,
except for dispositions required by federal regulatory
authorities as a condition of regulatory approval for the
transaction, dispositions made in the ordinary course of
business, or transfers described in Section 368(a) (2)(C) of
the Code. Such dispositions of Bank assets will constitute
a disposition of less than 50 (fifty) percent of the fair
market value of the assets of Bank. Proceeds from the
disposition of Bank assets will be retained for use in the
conduct of the trade or business of Bank.
c) Following the transactions, FCC and FNBLC will continue the
historic businesses of Holding and Bank, respectively, or
use a significant portion of these historic business assets
in the operation of a trade or business.
d) The payment of cash in lieu of fractional shares of FCC
common stock is solely for the purpose of avoiding the
expense and inconvenience to FCC of issuing fractional
shares and does not represent separately bargained-for
consideration. The total cash consideration that will be
paid in the transaction to the Holding stockholders instead
of issuing fractional shares of FCC common stock will not
exceed (1) one percent of the total consideration that will
be issued in the transaction to the Holding stockholders in
exchange for their shares of Holding common stock. The
fractional share interests of each Holding stockholder will
be aggregated, and no Holding stockholder will receive cash
for such fractional share interests in an amount equal to or
greater than the value of one full share of FCC common
stock.
e) The assumption by FCC of the liabilities of Holding, and
FNBLC of the liabilities of Bank, pursuant to the
transactions are for bona fide business purposes and the
principal purpose of such assumptions is not the avoidance
of federal income tax on the transfer of assets of Holding
to FCC, or Bank to FNBLC, respectively, pursuant to the
transactions.
f) FCC and FNBLC are not investment companies as defined in
Sections 368(a)(2)(F)(iii) and 368(a)(2)(F)(iv).
g) The proposed transaction is being undertaken for reasons
germane to the continuance of the business of FCC and FNBLC.
The following representations have been made to us by
representatives of Holding and Bank:
a) There is no plan or intention by the Holding common
stockholders who own one percent or more of the stock, and
to the best of the knowledge of the management of Holding,
there is no plan or intention on the part of the remaining
common stockholders to sell, exchange, or otherwise dispose
of a number of shares of FCC common stock received in the
transaction that would reduce the stockholders' ownership of
FCC common stock to a number of shares having a value, as of
the Effective Date, of less than (50) fifty percent of the
value of all the formerly outstanding common stock of
Holding as of the same date. For purposes of this
representation, shares of Holding common stock exchanged for
cash in lieu of fractional shares of FCC stock will be
treated as outstanding Holding common stock on the Effective
Date. Moreover, shares of Holding common stock and shares
of FCC common stock held by Holding stockholders and
otherwise sold, redeemed, or disposed of prior to the
transaction in contemplation thereof, or subsequent to the
transaction, will be considered in making this
representation.
b) The liabilities of Holding and Bank assumed by FCC and
FNBLC, respectively, and the liabilities to which the
transferred assets of Holding and Bank are subject were
incurred by Holding and Bank in the ordinary course of
business.
c) Holding and Bank are not investment companies as defined in
Sections 368(a)(2)(F)(iii) and 368(a)(2)(F)(iv).
d) The proposed transaction is being undertaken for reasons
germane to the continuance of the business of Holding and
Bank.
Analysis of Applicable Federal Tax Provisions
Section 354(a)(1) addresses the effects of corporate
reorganizations on shareholders, providing in general that no
gain or loss shall be recognized if stock or securities in a
corporation a party to a reorganization are, in pursuance of the
plan of reorganization, exchanged solely for stock or securities
in such corporation or in another corporation, a party to the
reorganization.
For purposes of Code Section 354, the terms "reorganization" and
"party to a reorganization" mean only a reorganization or a party
to a reorganization as defined in Sections 368(a) and 368(b).
Section 368(a)(1)(A) states that the term reorganization includes
a statutory merger or consolidation. Reg. Section 1.368-2(b)(1)
states that in order for a transaction to qualify as a
reorganization under Section 368(a)(1)(A), the transaction must
be a merger or consolidation effected pursuant to the corporation
laws of the United States or State or Territory or the District
of Columbia. Under Section 368(b), the term party to a
reorganization includes both corporations in the case of a
reorganization resulting from the acquisition by one corporation
of stock or properties of another.
The regulations under Section 368 require as a part of a
reorganization a continuity of the business enterprise under the
modified corporate form, a bona fide business purpose for the
reorganization, and a continuity of interest therein on the part
of those persons who, directly or indirectly, were owners of the
enterprise prior to the reorganization. Reg. Section 1.368-
1(d)(2) states that the continuity of business enterprise
requirement is met if the acquiring corporation either continues
the acquired corporation's historic business or uses a
significant portion of the acquired corporation's business assets
in the operation of a trade or business. Based on the
representations set forth above, the continuity of business
enterprise requirement is met with respect to the assets and
business operations of Bank.
Reg. Section 1.368-2(g) indicates that in addition to coming
within the scope of the specific language of Sec. 368(a), a
reorganization must also be "undertaken for reasons germane to
the continuance of the business of a corporation a party to the
reorganization." If the transaction or series of transactions
has no business or corporate purpose, then the plan is not a
reorganization pursuant to Section 368(a). [Reg. Section 1.368-
1(c).] Based on the representations set forth above, the
transaction meets the business purpose requirement.
The continuity of interest requirement does not require that all
shareholders of the acquired corporation have a proprietary
interest in the surviving corporation after the acquisition; it
is not even necessary for a substantial percentage of such
shareholders to have such an interest. Rather, the IRS announced
in Rev. Proc. 77-37 that it would rule that the continuity of
interest requirement is met so long as one or more of the
acquired corporation's shareholders retain a sufficient
proprietary interest in the continuing corporation. The IRS
indicated in Rev. Proc. 77-37 that a sufficient proprietary
interest is an interest with a value that is at least 50% of the
total equity value of the acquired corporation.
In addition to meeting the continuity of interest requirement
immediately after the reorganization, the former shareholders of
the acquired corporation must retain their interest in the
acquiring corporation for some time after the reorganization.
The courts have ruled that the tax-free nature of the
reorganization may be retroactively invalidated if the continuity
of interest is not maintained either because, at the time of the
reorganization, the shareholders intended to dispose of the
proprietary interest soon after the reorganization (Christian
Est. v. Comr., T.C. Memo 1989-413) or because a shareholder
disposes of stock immediately following the reorganization in
accordance with a pre-existing commitment to sell (American Wire
Fabrics Corp. v. Comr., 16 TC 607). The courts have generally
looked to the intent of the shareholders at the time of the
reorganization to dispose of their interests in determining
whether the continuity of interest requirement is subsequently
violated.
The Internal Revenue Service has ruled that the continuity of
interest requirement was met in situations similar to the
proposed transactions (PLR 8839036, PLR 8903054, PLR 9319017 and
PLR 9325026). It should be noted, however, that a private letter
ruling (PLR) is directed only to the taxpayer who requested it.
Section 6110(j)(3) provides that it may not be used or cited as
precedent. On the other hand, a PLR does represent an indication
of how the IRS may view the tax consequences of a taxpayer with
similar facts and circumstances. In these rulings, a corporation
and its wholly-owned subsidiary were simultaneously merged into
the acquiring parent and its wholly-owned subsidiary,
respectively, as part of the same overall transaction. Based on
the representations set forth above, the continuity of interest
requirement is met with respect to FCC's ownership of Bank.
Section 356(a)(1) provides that if Section 354 would apply to an
exchange but for the fact that the property received in the
exchange consists not only of property permitted to be received
under Section 354 without the recognition of gain but also of
other property or money then the gain, if any, to the recipient
shall be recognized but not in excess of the sum of money and the
fair market value of the property received.
Section 356(c) states that no loss from the exchange may be
recognized by the shareholder.
In other official pronouncements, the Internal Revenue Service
has treated the distribution of cash distributed as part of a
reorganization and in a transaction subject to Section 356
considerations by applying the redemption principles under
Section 302. Section 302 provides, in part, that a redemption
will be treated as a distribution in part or full payment in
exchange for stock if it can meet the tests of that section.
In Rev. Rul. 66-365, the IRS announced that in a transaction
qualifying as a reorganization under Section 368(a)(1)(A) of the
Code where a cash payment is made by the acquiring corporation in
lieu of fractional shares and is not separately bargained for,
such cash payment will be treated under Section 302 of the Code
as in redemption of fractional share interests. Therefore, each
shareholder's redemption will be treated as a distribution in
full payment in exchange for his or her fractional share interest
under Section 302(a) of the Code and accorded capital gain or
loss treatment provided the redemption is not essentially
equivalent to a dividend and that the fractional shares redeemed
constitute a capital asset in the hands of the holder as
discussed below. In Rev. Proc. 77-41, the IRS stated that "a
ruling will usually be issued under Section 302(a) of the Code
that cash to be distributed to shareholders in lieu of fractional
share interests arising in corporate reorganizations...will be
treated as having been received in part or in full payment in
exchange for the stock redeemed if the cash distribution is
undertaken solely for the purpose of saving the corporation the
expense and inconvenience of issuing and transferring fractional
shares, and is not separately bargained-for consideration."
Under Section 302, where there is a complete redemption of all of
a shareholder's stock in a corporation (after consideration of
the constructive ownership rules of Section 302(c)), the
redemption payment is treated as made entirely in exchange for
the shareholder's stock in the corporation (Section 302(b)(3)).
Under Section 358(a)(1), in the case of an exchange to which
Section 354 or Section 356 applies, the basis of property which
is permitted to be received under such section without the
recognition of gain or loss shall be the same as that of the
property exchanged, decreased by the amount of any money received
by the recipient and the amount of loss recognized by the
recipient as a result of the exchange and increased by the amount
which was treated as a dividend and the amount of other gain
recognized by the recipient as a result of the transaction.
It should be noted that where cash is received in lieu of
fractional shares, the substance of the transaction is that of a
hypothetical receipt of the fractional shares and then a
redemption of such shares. Therefore, the basis that is to be
allocated to the stock of the acquiring corporation received must
be allocated to the shares retained and the fractional shares
hypothetically received. The gain or loss attributable to the
receipt of cash in lieu of fractional shares is measured by
comparing the cash received with the basis allocated to the
fractional shares that are hypothetically received, and such gain
or loss is recognized as discussed earlier pursuant to Rev. Rul.
66-365.
Code Section 361(a) states that, as a general rule, no gain or
loss is to be recognized by a corporation if such corporation is
a party to a reorganization and exchanges property, in pursuance
of the plan of reorganization, solely for stock or securities in
another corporation a party to the reorganization.
Section 361(b) states that if Section 361(a) would apply to an
exchange but for the fact that the property received in exchange
consists not only of stock or securities afforded nonrecognition
treatment under Section 361(a), but also of other property or
money, then provided the corporation receiving such other
property or money distributes it in pursuance to the plan of
reorganization, no gain to the corporation shall be recognized
from the exchange. Section 361(a) states that as a general rule
no gain or loss shall be recognized to a corporation a party to a
reorganization on the distribution to its shareholders of any
stock in another corporation which is a party to the
reorganization if such stock was received by the distributing
corporation in the exchange.
Section 1032(a) states that no gain or loss shall be recognized
to a corporation on the receipt of money or other property in
exchange for such corporation's stock, including treasury stock.
Code Section 362(b) states that the basis of property received by
the acquiring corporation in a reorganization is the same as it
would be in the hands of the transferor of the assets, increased
by any gain recognized by the transferor. The transferor for
purposes of the preceding sentence in the instant case is
Holding.
Section 1221 defines a capital asset as property held by the
taxpayer which is not inventory or other property held by the
taxpayer primarily for sale to customers in the ordinary course
of a trade or business, property used in the taxpayer's trade or
business subject to the allowance for depreciation under Section
167, a copyright, literary, musical or artistic composition, a
letter or memorandum, or similar property created by the personal
efforts of the taxpayer, accounts or notes receivable acquired in
the ordinary course of a trade or business for services rendered
or from the sale of inventory or other property held by the
taxpayer primarily for sale to customers in the ordinary course
of business, or a publication of the United States Government
which is received from the United States Government or any agency
thereof other than by purchase at the price at which it is
offered for sale to the public.
Section 1223(1) states that in determining the period for which a
taxpayer has held property received in an exchange, there shall
be included the period for which he or she held the property
exchanged if the property has, for the purpose of determining
gain or loss from a sale or exchange, the same basis as the
property exchanged and the property exchanged was a capital asset
as defined in Section 1221 as of the date of the exchange.
Section 1223(2) states that for determining the period for which
the taxpayer has held property however acquired there shall be
included the period for which such property was held by another
person if the property has the same basis in whole or in part in
his hands as it would have had in the hands of such other person.
Subchapter P of Chapter 1 of the Code provides limitations on the
recognition of capital gains and losses including, but not
limited to, the allowance of capital losses to the extent of
capital gains with respect to corporate taxpayers and the
allowance of up to $3,000 of net capital losses with respect to
taxpayers other than corporate taxpayers.
Opinion
Based upon all of the foregoing, including representations of the
management of FCC and the management and Board of Directors of
Holding, it is our opinion that:
a) The merger of Holding with and into FCC, as described above,
will constitute a reorganization under Section 368 of the
Code (Section 368(a)(1)(A)).
b) Holding and FCC will each be "a party to a reorganization"
(Section 368(b)).
c) No gain or loss will be recognized by the common
stockholders of Holding on the receipt of FCC common stock
in exchange for surrendered Holding common stock pursuant to
the plan of reorganization (Section 354(a)(1)).
d) The tax basis of the FCC common stock received by Holding
common stockholders will be the same as the basis of the
Holding common stock surrendered in exchange therefor,
decreased by the amount of basis allocated to the fractional
shares that are hypothetically received by the stockholder
and redeemed for cash, and increased by any gain recognized
on the exchange (not including any gain recognized for the
receipt of cash in lieu of fractional shares) (Section
358(a)(1)).
e) The holding period of the FCC common stock received by the
Holding common stockholders will include the period during
which the Holding common stock surrendered in exchange
therefor was held, provided that the Holding common stock is
held as a capital asset in the hands of the Holding
stockholders on the Effective Date (Section 1223(1)).
f) The payment of cash in lieu of fractional share interests of
FCC common stock will be treated as if each fractional share
was distributed as part of the exchange and then redeemed by
FCC. Pursuant to Section 302(a) of the Code, these cash
payments will be treated as having been received as
distributions in full payment in exchange for the FCC common
stock. Any gain or loss recognized upon such exchange (as
determined under Section 1001 and subject to the limitations
of Section 267) will be capital gain or loss provided the
fractional share would constitute a capital asset in the
hands of the exchanging stockholder (Rev. Rul. 66-365 and
Rev. Proc. 77-41).
g) Each shareholder of Holding who elects to dissent from the
merger transaction involving Holding and FCC under the
provisions of Louisiana R.S. 12:131, and receives cash in
exchange for their shares of Holding common stock, will be
treated as receiving such payment in complete redemption of
their shares of Holding, provided such shareholder does not
actually or constructively own any Holding common stock
after the exchange under the provisions and limitations of
Section 302.
h) No gain or loss will be recognized by Holding on the
transfer of all of its assets to FCC solely in exchange for
FCC common stock and cash in lieu of fractional shares which
is subsequently distributed to Holding common stockholders
pursuant to the plan of reorganization (Section 361).
i) No gain or loss will be recognized by FCC on the receipt by
FCC of substantially all of the assets of Holding in
exchange for FCC stock (Section 1032(a).)
j) The tax basis of Holding's assets in the hands of FCC will
be the same as the basis of those assets in the hands of
Holding immediately prior to the merger (Section 362(b)).
The tax basis of Holding's assets in the hands of FCC will
not be increased by any cash paid to dissenters or cash paid
in lieu of fractional shares.
k) The holding period of the assets of Holding in the hands of
FCC will include the period during which such assets were
held by Holding (Section 1223(2).)
l) The merger of Bank with and into FNBLC, as described above,
will constitute a reorganization under Section 368 of the
Code (Section 368 (a)(1)(A)).
m) FNBLC and Bank will each be a "party to a reorganization"
(Section 368 (b)).
n) No gain or loss will be recognized by FCC on the merger of
Bank into FNBLC (Section 354(a)(1)).
o) No gain or loss will be recognized by Bank on the transfer
of all of its assets to FNBLC pursuant to the plan of
reorganization (Section 361).
p) The tax basis of Bank's assets in the hands of FNBLC will be
the same as the basis of those assets in the hands of Bank
immediately prior to the transaction (Section 362(b)). The
tax basis of Bank's assets in the hands of FNBLC will not be
increased by any cash paid to dissenters or cash paid in
lieu of fractional shares.
q) The holding period of the assets of Bank in the hands of
FNBLC will include the period during which such assets were
held by Bank (Section 1223(2)).
We express no opinion on the impact, if any, on any other
sections of the Code, including but not limited to Section 382,
other than that as stated immediately above, and neither this
opinion nor any prior statements are intended to imply or to be
an opinion on any other matters.
In analyzing the authorities relevant to the potential tax issues
outlined in the opinions we have applied the standards of
"substantial authority" and "more likely than not proper," as
used in Section 6662 under current law. Based upon our analysis,
we have concluded that there is substantial authority for the
indicated tax treatment of the transaction, and we also believe
the indicated tax treatment of the transaction is more likely
than not proper.
The opinions expressed herein are based solely upon our
interpretation of the Code and income tax regulations as further
interpreted by court decisions, rulings, and procedures issued by
the Internal Revenue Service, as of the effective date of this
letter. Our opinions may be subject to change in the event of
changes in any of the foregoing authorities, some of which could
be retroactive. The opinions expressed herein are not binding on
the Internal Revenue Service, and there can be no assurance that
the Internal Revenue Service will not take a position contrary to
any of the opinions expressed herein, or if the Internal Revenue
Service took such a position, whether it would be sustained by
the courts.
The opinions expressed herein reflect our assessment of the
probable outcome of litigation and other adversarial proceedings
based solely on an analysis of the existing tax authorities
relating to the issues. It is important, however, to note that
litigation and other adversarial proceedings are frequently
decided on the basis of such matters as negotiation and
pragmatism. Furthermore, in recent years, the court of law has
exhibited a willingness to interpret prior authorities, as well
as to develop new theories, in order to reach a conclusion which
will maximize tax revenues. We have not considered the effect of
such negotiation, pragmatism, and judicial willingness upon the
outcome of such potential litigation or other adversarial
proceedings. Further, Bank, FNBLC, and Holding common
stockholders are urged to discuss the consequences of the
proposed transactions with their own tax advisors.
Very truly yours,
ARTHUR ANDERSEN LLP
By
Charles A. Giraud III
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our
report dated January 11, 1995 included in First Commerce
Corporation's Form 10-K for the year ended December 31, 1994 and
to all references to our Firm included in this registration
statement.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana
April 27, 1995
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our
report dated February 10, 1995, except with respect to the
material disclosed in Note 15, as to which the date is
February 27, 1995, included in Lakeside Bancshares, Inc.'s
Form 10-K for the year ended December 31, 1994 and to all
references to our Firm included in this registration statement.
GRAGSON, CASIDAY & GUILLORY
Lake Charles, Louisiana
April 27, 1995
EXHIBIT 99
PROXY
LAKESIDE BANCSHARES, INC.
JUNE 27, 1995
SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby constitutes and appoints R. Wayne Vincent
and Andy McElveen, or any of them, the proxies of the
undersigned, with full power of substitution, to represent the
undersigned and to vote all of the shares of common stock of
Lakeside Bancshares, Inc. ("Bancshares") that the undersigned is
entitled to vote at the special meeting of the shareholders of
Bancshares to be held on June 27, 1995 and at any and all
adjournments thereof.
1. A proposal to approve an Agreement and Plan of Merger and
two related merger agreements (collectively, the "Plan")
pursuant to which, among other things, (i) Bancshares will
merge into First Commerce Corporation ("FCC") (the "Holding
Company Merger"); (ii) Lakeside National Bank of Lake
Charles, the wholly-owned bank subsidiary of Bancshares
will merge into The First National Bank of Lake Charles, a
wholly-owned bank subsidiary of FCC; and (iii) on the
effective date of the Holding Company Merger, each
outstanding share of common stock of Bancshares will be
converted into a number of shares of FCC common stock as
determined in accordance with the terms of the Plan.
FOR ______ AGAINST ______ ABSTAIN ______
2. In their discretion, to vote upon such other business as
may properly come before the meeting or any adjournment
thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFIC DIRECTIONS
ARE GIVEN, THIS PROXY WILL BE VOTED FOR THE PROPOSAL SET FORTH
HEREIN.
Please sign exactly as name appears on the certificate or
certificates representing shares to be voted by this proxy. When
signing as executor, administrator, attorney, trustee or
guardian, please give full title as such. If a corporation,
please sign in full corporate name by president or other
authorized persons. If a partnership, please sign in partnership
name by authorized persons.
Dated: ________, 1995 ______________________________
Signature of Shareholder
Insert Mailing Label ______________________________
Signature (if jointly owned)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
TO BANCSHARES PROMPTLY USING THE ENCLOSED ENVELOPE.
EXHIBIT 5
[CORRERO, FISHMAN & CASTEIX, L.L.P. LETTERHEAD]
April 27, 1995
First Commerce Corporation
210 Baronne Street
New Orleans, LA 70112
Gentlemen:
We have acted as counsel for First Commerce Corporation, a
Louisiana corporation (the "Company"), in connection with the
Company's Post-Effective Amendment No. 1 to its Registration
Statement on Form S-4 (the "Amendment") covering up to 1,540,000
shares of common stock (the "Common Stock") of the Company (the
"Shares") which the Company proposes to issue to shareholders of
Lakeside Bancshares, Inc. in accordance with the Agreement and
Plan of Merger (the "Plan") described in the Amendment.
For the purposes of the opinions expressed below, we have
examined the Amendment, the Plan, the Articles of Incorporation,
as amended, and By-laws, as amended, of the Company, resolutions
adopted by the Board of Directors and Executive Committee of the
Company and such other documents and sources of law as we
considered necessary.
On the basis of the foregoing, we are of the opinion that
the proposed issuance of the Shares has been duly authorized by
all necessary corporate action, and the Shares will, when issued
in accordance with the terms of the Plan, be validly issued,
fully paid and non-assessable.
We hereby consent (i) to be named in the Amendment under
the heading "Legal Matters" as counsel for the Company and (ii)
to the filing of this opinion as an Exhibit to the Amendment. In
so doing we do not admit that we are "experts" within the meaning
of the Securities Act of 1933.
Yours sincerely,
Anthony J. Correro, III
EXHIBIT 8
___, 1995
D R A F T
BY HAND
Mr. Leon K. Poche, Jr.
First Commerce Corporation
210 Baronne Street
New Orleans, Louisiana 70112
Dear Mr. Poche:
This opinion is being furnished to you in connection with the
proposed acquisition of Lakeside Bancshares, Inc. ("Holding") and
its wholly owned banking subsidiary, Lakeside National Bank of
Lake Charles ("Bank") by First Commerce Corporation ("FCC"),
which is expected to be completed on ___, 1995 ("the Effective
Date"). You have requested our opinion concerning the following:
. Whether the merger of Holding into FCC will qualify as a
reorganization under Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended ("the Code").
. That the exchange of Holding common stock to the extent
exchanged for FCC common stock will not give rise to gain or
loss for federal income tax purposes to the holders of
Holding common stock with respect to such exchange.
. Whether the merger of Bank into First National Bank of Lake
Charles ("FNBLC"), a wholly-owned banking subsidiary of FCC,
will qualify as a reorganization under Section 368(a)(1)(A)
of the Code.
You have asked for our opinion on the federal income tax
consequences to FCC, Holding, Bank, FNBLC and the stockholders of
Holding. We have not considered any nonincome tax, state, local
or foreign income tax consequences, and, therefore, do not
express any opinion regarding the treatment that would be given
the merger by the applicable authorities on any nonincome tax or
any state, local or foreign tax issues. We also express no
opinion on nontax issues, such as corporate law or securities law
matters, including, but not limited to, all securities law
disclosure requirements.
In rendering our opinion, we have relied upon the accuracy and
completeness of the facts and information as contained in the
Agreement and Plan of Merger dated February 27, 1995 ("the
Agreement"), including all exhibits attached thereto, and the
representations included below. To the extent there are any
changes to the Agreement or representations, our opinion may be
affected accordingly.
The discussion and conclusions set forth below are based upon the
Code, the Treasury Regulations, and existing administrative and
judicial interpretations thereof, as of the Effective Date, all
of which are subject to change. All section references are to
the Internal Revenue Code of 1986, as amended, unless otherwise
stated. If there is a change in the Code, the Treasury
Regulations or public rulings thereunder, the current Internal
Revenue Service rulings or releases, or in the prevailing
judicial interpretation of the foregoing, the opinion expressed
herein would necessarily have to be re-evaluated in light of any
such changes. We have no responsibility to update this opinion
for events, transactions, changes in the above-listed law and
authority or circumstances occurring after the Effective Date.
This opinion is solely for the benefit of Holding and FCC and is
not intended to be relied upon by anyone other than Holding and
FCC. Although you do hereby have our express consent to inform
Bank, FNBLC, and Holding common stockholders of our opinion by
including copies of this letter as an exhibit to the Agreement
and as an exhibit in the Registration Statement on Form S-4 for
the proposed transactions, we assume no responsibility for tax
consequences to them. Instead, each of these parties must
consult and rely upon the advice of his/her counsel, accountant
or other advisor. Except to the extent expressly permitted
hereby, and without the prior written consent of this firm, this
letter may not be quoted in whole or in part or otherwise
referred to in any documents or delivered to any other person or
entity.
Proposed Transaction
Our understanding of the proposed transactions, as described in
the Agreement, is as follows:
A. Holding will be merged with and into FCC under the Articles
of Incorporation of FCC, pursuant to Louisiana Business
Corporation Law.
B. Immediately following the merger of Holding into FCC, and as
part of the same overall transaction, Bank will be merged
with and into FNBLC pursuant to Federal law (12 U.S.C.
Section 215a). No additional shares of FNBLC or FCC will be
issued as a result of this transaction.
C. The common stockholders of Holding will receive shares of
FCC common stock proportionate in value, based on the terms
contained in Section 4 of Exhibit A of the Agreement. In
lieu of issuing fractional shares of FCC common stock as a
result of the merger, common stockholders of Holding will be
entitled to receive a cash payment equal to such fractional
share multiplied by the designated value of a share of FCC
common stock.
Unless stockholders of Holding common stock holding at least
eighty (80) percent of the voting rights of Holding approve the
plan of reorganization, objecting stockholders of Holding may
dissent from the merger involving Holding and FCC, and instead
receive cash in exchange for their shares of Holding common
stock, based on the fair market value of such stock determined
under Section 131 of the Louisiana Business Corporation Law (La.
R.S. Section 12:131).
FCC has publicly announced the authorization by its board of
directors of the repurchase of up to two million shares of its
common stock on the open market (the "Buyback Program"). The
stock to be repurchased will be widely held.
Additional Representations
In addition to the representations included in the Agreement, the
following representations have been made to us by representatives
of FCC, FNBLC, Holding, and Bank:
a) FCC and the stockholders of Holding will pay their
respective expenses, if any, incurred in connection with the
successful consummation of the transaction.
b) There is no intercorporate indebtedness existing between
Holding and FCC, or between FNBLC and Bank, that was issued,
acquired, or will be settled at a discount.
c) The fair market value of the assets of Holding transferred
to FCC will equal or exceed the sum of the liabilities
assumed by FCC plus the amount of liabilities, if any, to
which the transferred assets are subject.
d) The fair market value of the assets of Bank transferred to
FNBLC will equal or exceed the sum of the liabilities
assumed by FNBLC plus the amount of liabilities, if any, to
which the transferred assets are subject.
e) None of the compensation received by any stockholder-
employees of Holding or Bank will be separate consideration
for, or allocable to, any of their shares of Holding common
stock; none of the shares of FCC common stock received by
any stockholder-employees will be separate consideration
for, or allocable to, any employment agreement; and the
compensation paid to any stockholder-employees will be for
services actually rendered and will be commensurate with
amounts paid to third parties bargaining at arm's length for
similar services.
f) Holding will be merged with and into FCC under the Articles
of Incorporation of FCC, pursuant to Louisiana Business
Corporation Law.
g) Bank will be merged with and into FNBLC pursuant to Federal
law (12 U.S.C. Section 215a).
h) The Holding common stockholders will have unrestricted
rights of ownership of FCC common stock received in the
transaction, and their ability to retain the FCC common
stock received in the transaction will not be limited in any
way.
i) The ratio for the exchange of shares of Holding common stock
for FCC common stock in the transaction was negotiated
through arm's length bargaining. Accordingly, the fair
market value of the FCC common stock to be received by
Holding common stockholders in the transaction will be
approximately equal to the fair market value of the Holding
common stock surrendered by such stockholders in exchange
therefor.
The following representations have been made to us by
representatives of FCC and FNBLC:
a) FCC has no plan or intention to re-acquire any of its stock
issued in the transaction other than potential open market
transactions relating to the Buyback Program. Prior to
consummation of the transaction, and subsequent to the
announcement by FCC of the Buyback Program, FCC will have
obtained written representations from shareholders of
Holding owning in the aggregate at least (50) fifty percent
of the outstanding common stock of Holding, that they have
no plan or intention to sell, exchange, or otherwise dispose
of any FCC common stock to be received in the transaction.
b) FCC and FNBLC have no plan or intention to sell or otherwise
dispose of the stock of Bank or any of the assets of Holding
acquired in the transactions, except for dispositions made
in the ordinary course of business or transfers described in
Section 368(a)(2)(C) of the Code. Additionally, FCC and
FNBLC have no plan or intention to sell or otherwise dispose
of any of the assets of Bank acquired in the transactions,
except for dispositions required by federal regulatory
authorities as a condition of regulatory approval for the
transaction, dispositions made in the ordinary course of
business, or transfers described in Section 368(a) (2)(C) of
the Code. Such dispositions of Bank assets will constitute
a disposition of less than 50 (fifty) percent of the fair
market value of the assets of Bank. Proceeds from the
disposition of Bank assets will be retained for use in the
conduct of the trade or business of Bank.
c) Following the transactions, FCC and FNBLC will continue the
historic businesses of Holding and Bank, respectively, or
use a significant portion of these historic business assets
in the operation of a trade or business.
d) The payment of cash in lieu of fractional shares of FCC
common stock is solely for the purpose of avoiding the
expense and inconvenience to FCC of issuing fractional
shares and does not represent separately bargained-for
consideration. The total cash consideration that will be
paid in the transaction to the Holding stockholders instead
of issuing fractional shares of FCC common stock will not
exceed (1) one percent of the total consideration that will
be issued in the transaction to the Holding stockholders in
exchange for their shares of Holding common stock. The
fractional share interests of each Holding stockholder will
be aggregated, and no Holding stockholder will receive cash
for such fractional share interests in an amount equal to or
greater than the value of one full share of FCC common
stock.
e) The assumption by FCC of the liabilities of Holding, and
FNBLC of the liabilities of Bank, pursuant to the
transactions are for bona fide business purposes and the
principal purpose of such assumptions is not the avoidance
of federal income tax on the transfer of assets of Holding
to FCC, or Bank to FNBLC, respectively, pursuant to the
transactions.
f) FCC and FNBLC are not investment companies as defined in
Sections 368(a)(2)(F)(iii) and 368(a)(2)(F)(iv).
g) The proposed transaction is being undertaken for reasons
germane to the continuance of the business of FCC and FNBLC.
The following representations have been made to us by
representatives of Holding and Bank:
a) There is no plan or intention by the Holding common
stockholders who own one percent or more of the stock, and
to the best of the knowledge of the management of Holding,
there is no plan or intention on the part of the remaining
common stockholders to sell, exchange, or otherwise dispose
of a number of shares of FCC common stock received in the
transaction that would reduce the stockholders' ownership of
FCC common stock to a number of shares having a value, as of
the Effective Date, of less than (50) fifty percent of the
value of all the formerly outstanding common stock of
Holding as of the same date. For purposes of this
representation, shares of Holding common stock exchanged for
cash in lieu of fractional shares of FCC stock will be
treated as outstanding Holding common stock on the Effective
Date. Moreover, shares of Holding common stock and shares
of FCC common stock held by Holding stockholders and
otherwise sold, redeemed, or disposed of prior to the
transaction in contemplation thereof, or subsequent to the
transaction, will be considered in making this
representation.
b) The liabilities of Holding and Bank assumed by FCC and
FNBLC, respectively, and the liabilities to which the
transferred assets of Holding and Bank are subject were
incurred by Holding and Bank in the ordinary course of
business.
c) Holding and Bank are not investment companies as defined in
Sections 368(a)(2)(F)(iii) and 368(a)(2)(F)(iv).
d) The proposed transaction is being undertaken for reasons
germane to the continuance of the business of Holding and
Bank.
Analysis of Applicable Federal Tax Provisions
Section 354(a)(1) addresses the effects of corporate
reorganizations on shareholders, providing in general that no
gain or loss shall be recognized if stock or securities in a
corporation a party to a reorganization are, in pursuance of the
plan of reorganization, exchanged solely for stock or securities
in such corporation or in another corporation, a party to the
reorganization.
For purposes of Code Section 354, the terms "reorganization" and
"party to a reorganization" mean only a reorganization or a party
to a reorganization as defined in Sections 368(a) and 368(b).
Section 368(a)(1)(A) states that the term reorganization includes
a statutory merger or consolidation. Reg. Section 1.368-2(b)(1)
states that in order for a transaction to qualify as a
reorganization under Section 368(a)(1)(A), the transaction must
be a merger or consolidation effected pursuant to the corporation
laws of the United States or State or Territory or the District
of Columbia. Under Section 368(b), the term party to a
reorganization includes both corporations in the case of a
reorganization resulting from the acquisition by one corporation
of stock or properties of another.
The regulations under Section 368 require as a part of a
reorganization a continuity of the business enterprise under the
modified corporate form, a bona fide business purpose for the
reorganization, and a continuity of interest therein on the part
of those persons who, directly or indirectly, were owners of the
enterprise prior to the reorganization. Reg. Section 1.368-
1(d)(2) states that the continuity of business enterprise
requirement is met if the acquiring corporation either continues
the acquired corporation's historic business or uses a
significant portion of the acquired corporation's business assets
in the operation of a trade or business. Based on the
representations set forth above, the continuity of business
enterprise requirement is met with respect to the assets and
business operations of Bank.
Reg. Section 1.368-2(g) indicates that in addition to coming
within the scope of the specific language of Sec. 368(a), a
reorganization must also be "undertaken for reasons germane to
the continuance of the business of a corporation a party to the
reorganization." If the transaction or series of transactions
has no business or corporate purpose, then the plan is not a
reorganization pursuant to Section 368(a). [Reg. Section 1.368-
1(c).] Based on the representations set forth above, the
transaction meets the business purpose requirement.
The continuity of interest requirement does not require that all
shareholders of the acquired corporation have a proprietary
interest in the surviving corporation after the acquisition; it
is not even necessary for a substantial percentage of such
shareholders to have such an interest. Rather, the IRS announced
in Rev. Proc. 77-37 that it would rule that the continuity of
interest requirement is met so long as one or more of the
acquired corporation's shareholders retain a sufficient
proprietary interest in the continuing corporation. The IRS
indicated in Rev. Proc. 77-37 that a sufficient proprietary
interest is an interest with a value that is at least 50% of the
total equity value of the acquired corporation.
In addition to meeting the continuity of interest requirement
immediately after the reorganization, the former shareholders of
the acquired corporation must retain their interest in the
acquiring corporation for some time after the reorganization.
The courts have ruled that the tax-free nature of the
reorganization may be retroactively invalidated if the continuity
of interest is not maintained either because, at the time of the
reorganization, the shareholders intended to dispose of the
proprietary interest soon after the reorganization (Christian
Est. v. Comr., T.C. Memo 1989-413) or because a shareholder
disposes of stock immediately following the reorganization in
accordance with a pre-existing commitment to sell (American Wire
Fabrics Corp. v. Comr., 16 TC 607). The courts have generally
looked to the intent of the shareholders at the time of the
reorganization to dispose of their interests in determining
whether the continuity of interest requirement is subsequently
violated.
The Internal Revenue Service has ruled that the continuity of
interest requirement was met in situations similar to the
proposed transactions (PLR 8839036, PLR 8903054, PLR 9319017 and
PLR 9325026). It should be noted, however, that a private letter
ruling (PLR) is directed only to the taxpayer who requested it.
Section 6110(j)(3) provides that it may not be used or cited as
precedent. On the other hand, a PLR does represent an indication
of how the IRS may view the tax consequences of a taxpayer with
similar facts and circumstances. In these rulings, a corporation
and its wholly-owned subsidiary were simultaneously merged into
the acquiring parent and its wholly-owned subsidiary,
respectively, as part of the same overall transaction. Based on
the representations set forth above, the continuity of interest
requirement is met with respect to FCC's ownership of Bank.
Section 356(a)(1) provides that if Section 354 would apply to an
exchange but for the fact that the property received in the
exchange consists not only of property permitted to be received
under Section 354 without the recognition of gain but also of
other property or money then the gain, if any, to the recipient
shall be recognized but not in excess of the sum of money and the
fair market value of the property received.
Section 356(c) states that no loss from the exchange may be
recognized by the shareholder.
In other official pronouncements, the Internal Revenue Service
has treated the distribution of cash distributed as part of a
reorganization and in a transaction subject to Section 356
considerations by applying the redemption principles under
Section 302. Section 302 provides, in part, that a redemption
will be treated as a distribution in part or full payment in
exchange for stock if it can meet the tests of that section.
In Rev. Rul. 66-365, the IRS announced that in a transaction
qualifying as a reorganization under Section 368(a)(1)(A) of the
Code where a cash payment is made by the acquiring corporation in
lieu of fractional shares and is not separately bargained for,
such cash payment will be treated under Section 302 of the Code
as in redemption of fractional share interests. Therefore, each
shareholder's redemption will be treated as a distribution in
full payment in exchange for his or her fractional share interest
under Section 302(a) of the Code and accorded capital gain or
loss treatment provided the redemption is not essentially
equivalent to a dividend and that the fractional shares redeemed
constitute a capital asset in the hands of the holder as
discussed below. In Rev. Proc. 77-41, the IRS stated that "a
ruling will usually be issued under Section 302(a) of the Code
that cash to be distributed to shareholders in lieu of fractional
share interests arising in corporate reorganizations...will be
treated as having been received in part or in full payment in
exchange for the stock redeemed if the cash distribution is
undertaken solely for the purpose of saving the corporation the
expense and inconvenience of issuing and transferring fractional
shares, and is not separately bargained-for consideration."
Under Section 302, where there is a complete redemption of all of
a shareholder's stock in a corporation (after consideration of
the constructive ownership rules of Section 302(c)), the
redemption payment is treated as made entirely in exchange for
the shareholder's stock in the corporation (Section 302(b)(3)).
Under Section 358(a)(1), in the case of an exchange to which
Section 354 or Section 356 applies, the basis of property which
is permitted to be received under such section without the
recognition of gain or loss shall be the same as that of the
property exchanged, decreased by the amount of any money received
by the recipient and the amount of loss recognized by the
recipient as a result of the exchange and increased by the amount
which was treated as a dividend and the amount of other gain
recognized by the recipient as a result of the transaction.
It should be noted that where cash is received in lieu of
fractional shares, the substance of the transaction is that of a
hypothetical receipt of the fractional shares and then a
redemption of such shares. Therefore, the basis that is to be
allocated to the stock of the acquiring corporation received must
be allocated to the shares retained and the fractional shares
hypothetically received. The gain or loss attributable to the
receipt of cash in lieu of fractional shares is measured by
comparing the cash received with the basis allocated to the
fractional shares that are hypothetically received, and such gain
or loss is recognized as discussed earlier pursuant to Rev. Rul.
66-365.
Code Section 361(a) states that, as a general rule, no gain or
loss is to be recognized by a corporation if such corporation is
a party to a reorganization and exchanges property, in pursuance
of the plan of reorganization, solely for stock or securities in
another corporation a party to the reorganization.
Section 361(b) states that if Section 361(a) would apply to an
exchange but for the fact that the property received in exchange
consists not only of stock or securities afforded nonrecognition
treatment under Section 361(a), but also of other property or
money, then provided the corporation receiving such other
property or money distributes it in pursuance to the plan of
reorganization, no gain to the corporation shall be recognized
from the exchange. Section 361(a) states that as a general rule
no gain or loss shall be recognized to a corporation a party to a
reorganization on the distribution to its shareholders of any
stock in another corporation which is a party to the
reorganization if such stock was received by the distributing
corporation in the exchange.
Section 1032(a) states that no gain or loss shall be recognized
to a corporation on the receipt of money or other property in
exchange for such corporation's stock, including treasury stock.
Code Section 362(b) states that the basis of property received by
the acquiring corporation in a reorganization is the same as it
would be in the hands of the transferor of the assets, increased
by any gain recognized by the transferor. The transferor for
purposes of the preceding sentence in the instant case is
Holding.
Section 1221 defines a capital asset as property held by the
taxpayer which is not inventory or other property held by the
taxpayer primarily for sale to customers in the ordinary course
of a trade or business, property used in the taxpayer's trade or
business subject to the allowance for depreciation under Section
167, a copyright, literary, musical or artistic composition, a
letter or memorandum, or similar property created by the personal
efforts of the taxpayer, accounts or notes receivable acquired in
the ordinary course of a trade or business for services rendered
or from the sale of inventory or other property held by the
taxpayer primarily for sale to customers in the ordinary course
of business, or a publication of the United States Government
which is received from the United States Government or any agency
thereof other than by purchase at the price at which it is
offered for sale to the public.
Section 1223(1) states that in determining the period for which a
taxpayer has held property received in an exchange, there shall
be included the period for which he or she held the property
exchanged if the property has, for the purpose of determining
gain or loss from a sale or exchange, the same basis as the
property exchanged and the property exchanged was a capital asset
as defined in Section 1221 as of the date of the exchange.
Section 1223(2) states that for determining the period for which
the taxpayer has held property however acquired there shall be
included the period for which such property was held by another
person if the property has the same basis in whole or in part in
his hands as it would have had in the hands of such other person.
Subchapter P of Chapter 1 of the Code provides limitations on the
recognition of capital gains and losses including, but not
limited to, the allowance of capital losses to the extent of
capital gains with respect to corporate taxpayers and the
allowance of up to $3,000 of net capital losses with respect to
taxpayers other than corporate taxpayers.
Opinion
Based upon all of the foregoing, including representations of the
management of FCC and the management and Board of Directors of
Holding, it is our opinion that:
a) The merger of Holding with and into FCC, as described above,
will constitute a reorganization under Section 368 of the
Code (Section 368(a)(1)(A)).
b) Holding and FCC will each be "a party to a reorganization"
(Section 368(b)).
c) No gain or loss will be recognized by the common
stockholders of Holding on the receipt of FCC common stock
in exchange for surrendered Holding common stock pursuant to
the plan of reorganization (Section 354(a)(1)).
d) The tax basis of the FCC common stock received by Holding
common stockholders will be the same as the basis of the
Holding common stock surrendered in exchange therefor,
decreased by the amount of basis allocated to the fractional
shares that are hypothetically received by the stockholder
and redeemed for cash, and increased by any gain recognized
on the exchange (not including any gain recognized for the
receipt of cash in lieu of fractional shares) (Section
358(a)(1)).
e) The holding period of the FCC common stock received by the
Holding common stockholders will include the period during
which the Holding common stock surrendered in exchange
therefor was held, provided that the Holding common stock is
held as a capital asset in the hands of the Holding
stockholders on the Effective Date (Section 1223(1)).
f) The payment of cash in lieu of fractional share interests of
FCC common stock will be treated as if each fractional share
was distributed as part of the exchange and then redeemed by
FCC. Pursuant to Section 302(a) of the Code, these cash
payments will be treated as having been received as
distributions in full payment in exchange for the FCC common
stock. Any gain or loss recognized upon such exchange (as
determined under Section 1001 and subject to the limitations
of Section 267) will be capital gain or loss provided the
fractional share would constitute a capital asset in the
hands of the exchanging stockholder (Rev. Rul. 66-365 and
Rev. Proc. 77-41).
g) Each shareholder of Holding who elects to dissent from the
merger transaction involving Holding and FCC under the
provisions of Louisiana R.S. 12:131, and receives cash in
exchange for their shares of Holding common stock, will be
treated as receiving such payment in complete redemption of
their shares of Holding, provided such shareholder does not
actually or constructively own any Holding common stock
after the exchange under the provisions and limitations of
Section 302.
h) No gain or loss will be recognized by Holding on the
transfer of all of its assets to FCC solely in exchange for
FCC common stock and cash in lieu of fractional shares which
is subsequently distributed to Holding common stockholders
pursuant to the plan of reorganization (Section 361).
i) No gain or loss will be recognized by FCC on the receipt by
FCC of substantially all of the assets of Holding in
exchange for FCC stock (Section 1032(a).)
j) The tax basis of Holding's assets in the hands of FCC will
be the same as the basis of those assets in the hands of
Holding immediately prior to the merger (Section 362(b)).
The tax basis of Holding's assets in the hands of FCC will
not be increased by any cash paid to dissenters or cash paid
in lieu of fractional shares.
k) The holding period of the assets of Holding in the hands of
FCC will include the period during which such assets were
held by Holding (Section 1223(2).)
l) The merger of Bank with and into FNBLC, as described above,
will constitute a reorganization under Section 368 of the
Code (Section 368 (a)(1)(A)).
m) FNBLC and Bank will each be a "party to a reorganization"
(Section 368 (b)).
n) No gain or loss will be recognized by FCC on the merger of
Bank into FNBLC (Section 354(a)(1)).
o) No gain or loss will be recognized by Bank on the transfer
of all of its assets to FNBLC pursuant to the plan of
reorganization (Section 361).
p) The tax basis of Bank's assets in the hands of FNBLC will be
the same as the basis of those assets in the hands of Bank
immediately prior to the transaction (Section 362(b)). The
tax basis of Bank's assets in the hands of FNBLC will not be
increased by any cash paid to dissenters or cash paid in
lieu of fractional shares.
q) The holding period of the assets of Bank in the hands of
FNBLC will include the period during which such assets were
held by Bank (Section 1223(2)).
We express no opinion on the impact, if any, on any other
sections of the Code, including but not limited to Section 382,
other than that as stated immediately above, and neither this
opinion nor any prior statements are intended to imply or to be
an opinion on any other matters.
In analyzing the authorities relevant to the potential tax issues
outlined in the opinions we have applied the standards of
"substantial authority" and "more likely than not proper," as
used in Section 6662 under current law. Based upon our analysis,
we have concluded that there is substantial authority for the
indicated tax treatment of the transaction, and we also believe
the indicated tax treatment of the transaction is more likely
than not proper.
The opinions expressed herein are based solely upon our
interpretation of the Code and income tax regulations as further
interpreted by court decisions, rulings, and procedures issued by
the Internal Revenue Service, as of the effective date of this
letter. Our opinions may be subject to change in the event of
changes in any of the foregoing authorities, some of which could
be retroactive. The opinions expressed herein are not binding on
the Internal Revenue Service, and there can be no assurance that
the Internal Revenue Service will not take a position contrary to
any of the opinions expressed herein, or if the Internal Revenue
Service took such a position, whether it would be sustained by
the courts.
The opinions expressed herein reflect our assessment of the
probable outcome of litigation and other adversarial proceedings
based solely on an analysis of the existing tax authorities
relating to the issues. It is important, however, to note that
litigation and other adversarial proceedings are frequently
decided on the basis of such matters as negotiation and
pragmatism. Furthermore, in recent years, the court of law has
exhibited a willingness to interpret prior authorities, as well
as to develop new theories, in order to reach a conclusion which
will maximize tax revenues. We have not considered the effect of
such negotiation, pragmatism, and judicial willingness upon the
outcome of such potential litigation or other adversarial
proceedings. Further, Bank, FNBLC, and Holding common
stockholders are urged to discuss the consequences of the
proposed transactions with their own tax advisors.
Very truly yours,
ARTHUR ANDERSEN LLP
By
Charles A. Giraud III
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
use of our report (and to all references to our Firm)
included in or made a part of the Registration Statement.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana
April 27, 1995
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our
report dated February 10, 1995, except with respect to the
material disclosed in Note 15, as to which the date is
February 27, 1995, included in Lakeside Bancshares, Inc.'s
Form 10-K for the year ended December 31, 1994 and to all
references to our Firm included in this registration statement.
GRAGSON, CASIDAY & GUILLORY
Lake Charles, Louisiana
April 27, 1995
EXHIBIT 99
PROXY
LAKESIDE BANCSHARES, INC.
JUNE 27, 1995
SPECIAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby constitutes and appoints R. Wayne Vincent
and Andy McElveen, or any of them, the proxies of the
undersigned, with full power of substitution, to represent the
undersigned and to vote all of the shares of common stock of
Lakeside Bancshares, Inc. ("Bancshares") that the undersigned is
entitled to vote at the special meeting of the shareholders of
Bancshares to be held on June 27, 1995 and at any and all
adjournments thereof.
1. A proposal to approve an Agreement and Plan of Merger and
two related merger agreements (collectively, the "Plan")
pursuant to which, among other things, (i) Bancshares will
merge into First Commerce Corporation ("FCC") (the "Holding
Company Merger"); (ii) Lakeside National Bank of Lake
Charles, the wholly-owned bank subsidiary of Bancshares
will merge into The First National Bank of Lake Charles, a
wholly-owned bank subsidiary of FCC; and (iii) on the
effective date of the Holding Company Merger, each
outstanding share of common stock of Bancshares will be
converted into a number of shares of FCC common stock as
determined in accordance with the terms of the Plan.
FOR ______ AGAINST ______ ABSTAIN ______
2. In their discretion, to vote upon such other business as
may properly come before the meeting or any adjournment
thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFIC DIRECTIONS
ARE GIVEN, THIS PROXY WILL BE VOTED FOR THE PROPOSAL SET FORTH
HEREIN.
Please sign exactly as name appears on the certificate or
certificates representing shares to be voted by this proxy. When
signing as executor, administrator, attorney, trustee or
guardian, please give full title as such. If a corporation,
please sign in full corporate name by president or other
authorized persons. If a partnership, please sign in partnership
name by authorized persons.
Dated: ________, 1995 ______________________________
Signature of Shareholder
Insert Mailing Label ______________________________
Signature (if jointly owned)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
TO BANCSHARES PROMPTLY USING THE ENCLOSED ENVELOPE.
